flexiblefullpage
billboard
interstitial1
catfish1
Currently Reading

ABC’s Construction Backlog Indicator hits a new high in second quarter of 2018

Market Data

ABC’s Construction Backlog Indicator hits a new high in second quarter of 2018

Backlog is up 12.2% from the first quarter and 14% compared to the same time last year.


By ABC | September 17, 2018

Associated Builders and Contractors reports that its Construction Backlog Indicator expanded to a record 9.9 months during the second quarter of 2018. Backlog is up 12.2% from the first quarter and 14% compared to the same time last year.

“Construction backlog has never been higher in the history of this series,” said ABC Chief Economist Anirban Basu. “While contractors collectively reported a higher backlog, it was the industrial contractor segment that had the largest increase in the second quarter. With industrial production rising and factory capacity utilization recovering, there is more demand for both improved and new industrial space. This was especially apparent among contractors in the southern United States, where backlog stands at 11.2 months and has increased 2.2 months over the past year.  

“The disproportionate role played by technology companies in creating economic growth is also apparent in the data,” said Basu. “Contractors operating in tech-laden communities like San Jose, California; Seattle; Portland, Oregon; Provo/Salt Lake, Utah; and elsewhere continue to report very strong backlog. Given announcements of new, large-scale data centers and tech campuses, technology is positioned to be an ongoing driver of demand for construction services.

“During the first quarter we noted that there had been a significant uptick in survey participation that could have affected our findings due to shifting participant composition,” said Basu. “The second quarter was also characterized by elevated participation levels. It appears that higher participation is now the norm, and that the addition of survey participants has only served to render CBI a more reliable indicator.”

 

Highlights by Region

— Backlog in the South increased by more than one month on a quarterly basis and now sits just below its all-time high established during the third quarter of 2017. Construction backlog expansion continues to be driven by the usual suspects, including rapidly expanding metropolitan areas like Dallas and Austin, Texas; Atlanta; Orlando and Tampa/St. Petersburg, Florida; Charleston, South Carolina; Nashville, Tennessee; and Raleigh-Durham, North Carolina. 

— Backlog in the Northeast rose to its highest level on record. Predictably, backlog growth continues to be led by strong commercial segments in the New York,  Boston, Philadelphia, Washington and Baltimore metropolitan areas. There is also growing evidence of stronger construction activity in West Virginia and western Pennsylvania.

— The exception to the general trend of growing backlog is the Middle States, where backlog is down 0.7 months on a year-over-year basis. Many factors are at work, including relatively softer employment growth in the Chicago, Detroit and St. Louis metropolitan areas. This is the part of the country that is most vulnerable to low agricultural commodity prices, which continue to restrain overall economic performance in states like Iowa and Nebraska.

— Led by technology segments, backlog in the West continues to surge, up by an astonishing 3.9 months over the past year. Contractors in Seattle; Portland, Oregon; San Jose and Los Angeles, California; Denver; Salt Lake City; Boise, Idaho; and Phoenix can expect to remain ultra-busy for the foreseeable future, strongly suggesting that human capital shortfalls will continue to worsen.

Highlights by Industry

— Backlog in the commercial/institutional segment rebounded during the second quarter, increasing to 10.1 months. Backlog in this segment is up more than 20% from the second quarter of 2017. This is remarkable given expectations prevailing a year ago. Back then, many worried that a number of commercial segments had become overbuilt, at least in certain geographies. This suggested that backlog was vulnerable, with fewer new projects moving from the drawing board to construction. Instead, the accelerated growth of the U.S. economy has further bolstered demand for commercial space, driving up the segment’s construction backlog in the process. 

— Backlog in the heavy industrial category reached an all-time high of 7.8 months during the second quarter, a testament to the ongoing expansion of industrial production in the United States. Construction spending related to manufacturing had declined in recent years but exhibited growth during the second quarter. Tariffs, potential trade wars and rising input prices remain risks to this segment’s near-term outlook.

— Backlog in the infrastructure category edged higher during the second quarter to 10.1 months. Despite the lack of a federal infrastructure package, a number of state governments are meaningfully increasing public infrastructure outlays as their finances continue to improve in conjunction with the U.S. economy, now in its 10th year of expansion. Based on U.S. Census Bureau data, construction spending in the water supply category is up 29% on a year-over-year basis, conservation and development (e.g. flood control) by 24%, transportation by nearly 21%, public safety-related spending by 17% and sewage and waste disposal by 11%.

 

Highlights by Company Size

— Large firms with annual revenues in excess of $100 million experienced a sharp increase in backlog. Surging business confidence would have a tendency to result in larger, potentially more risky projects moving forward. This disproportionately inures to the benefit of larger firms with the capacity to handle such projects. This segment’s backlog has increased by 2.4 months over the past year.

— Average backlog among firms with annual revenues between $50 million and $100 million increased by half a month and now stands at 11.6 months. Backlog in this segment has steadily ratcheted higher since a cyclical low experienced during the first quarter of 2016.

— Backlog for firms with between $30 million and $50 million in annual revenues surged 61% during the second quarter. Increased survey participation may be an underlying cause of this segment’s observed construction backlog volatility. However, even if one excludes new entrants to the survey, backlog among this group, which includes many specialty trade contractors, has clearly risen robustly over the past year.

— Backlog for firms with annual revenues of less than $30 million increased to 8.5 months during the second quarter, an all-time high. Backlog in this segment has risen almost precisely by a month over the past year.

Related Stories

Market Data | Nov 27, 2023

Number of employees returning to the office varies significantly by city

While the return-to-the-office trend is felt across the country, the percentage of employees moving back to their offices varies significantly according to geography, according to Eptura’s Q3 Workplace Index.

Market Data | Nov 14, 2023

The average U.S. contractor has 8.4 months worth of construction work in the pipeline, as of September 2023

Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.4 months in October from 9.0 months in September, according to an ABC member survey conducted from Oct. 19 to Nov. 2. The reading is down 0.4 months from October 2022. Backlog now stands at its lowest level since the first quarter of 2022.

Multifamily Housing | Nov 9, 2023

Multifamily project completions forecast to slow starting 2026

Yardi Matrix has released its Q4 2023 Multifamily Supply Forecast, emphasizing a short-term spike and plateau of new construction.

Contractors | Nov 1, 2023

Nonresidential construction spending increases for the 16th straight month, in September 2023

National nonresidential construction spending increased 0.3% in September, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.1 trillion.

Market Data | Oct 23, 2023

New data finds that the majority of renters are cost-burdened

The most recent data derived from the 2022 Census American Community Survey reveals that the proportion of American renters facing housing cost burdens has reached its highest point since 2012, undoing the progress made in the ten years leading up to the pandemic.

Contractors | Oct 19, 2023

Crane Index indicates slowing private-sector construction

Private-sector construction in major North American cities is slowing, according to the latest RLB Crane Index. The number of tower cranes in use declined 10% since the first quarter of 2023. The index, compiled by consulting firm Rider Levett Bucknall (RLB), found that only two of 14 cities—Boston and Toronto—saw increased crane counts.

Market Data | Oct 2, 2023

Nonresidential construction spending rises 0.4% in August 2023, led by manufacturing and public works sectors

National nonresidential construction spending increased 0.4% in August, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.09 trillion.

Giants 400 | Sep 28, 2023

Top 100 University Building Construction Firms for 2023

Turner Construction, Whiting-Turner Contracting Co., STO Building Group, Suffolk Construction, and Skanska USA top BD+C's ranking of the nation's largest university sector contractors and construction management firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report. Note: This ranking includes revenue for all university/college-related buildings except student residence halls, sports/recreation facilities, laboratories, S+T-related buildings, parking facilities, and performing arts centers (revenue for those buildings are reported in their respective Giants 400 ranking). 

Construction Costs | Sep 28, 2023

U.S. construction market moves toward building material price stabilization

The newly released Quarterly Construction Cost Insights Report for Q3 2023 from Gordian reveals material costs remain high compared to prior years, but there is a move towards price stabilization for building and construction materials after years of significant fluctuations. In this report, top industry experts from Gordian, as well as from Gilbane, McCarthy Building Companies, and DPR Construction weigh in on the overall trends seen for construction material costs, and offer innovative solutions to navigate this terrain.

Data Centers | Sep 21, 2023

North American data center construction rises 25% to record high in first half of 2023, driven by growth of artificial intelligence

CBRE’s latest North American Data Center Trends Report found there is 2,287.6 megawatts (MW) of data center supply currently under construction in primary markets, reaching a new all-time high with more than 70% already preleased. 

boombox1
boombox2
native1

More In Category




halfpage1

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021