flexiblefullpage
billboard
interstitial1
catfish1
Currently Reading

ABC’s Construction Backlog Indicator remains elevated in first quarter of 2018

Market Data

ABC’s Construction Backlog Indicator remains elevated in first quarter of 2018

The CBI shows highlights by region, industry, and company size.


By ABC | June 19, 2018

Associated Builders and Contractors (ABC) reports that its Construction Backlog Indicator (CBI) contracted to 8.8 months during the first quarter of 2018, down 9% from the prior quarter. CBI is down 2% on a year-over-year basis.

“The Construction Backlog Indicator hit an all-time high during the fourth quarter of 2017,” said ABC Chief Economist Anirban Basu. “A number of factors pushed backlog lower during the first quarter of 2018, including an extensive winter. Only one region has experienced a decline in backlog on a year-over-year basis: the Middle States, which encompasses the Upper Midwest. There also was a significant uptick in survey participation during the first quarter, which may have helped shape the result. In sum, average backlog remains lofty by historic standards. 

“Given improved weather and normal seasonal factors, it is likely that backlog will bounce back during the second quarter. However, the level of improvement may be undermined by a combination of worker shortages and rapidly rising construction materials prices. Despite recent increases in the costs of delivering construction services due to rising human capital and materials costs, there is scant evidence of a decline in demand for construction services,” said Basu.

 

 

Highlights by Region

— Backlog in the South fell 8% during the first quarter, but remains 2.9% higher on a year-over-year basis.  Large metropolitan areas such as Tampa, Fla., Atlanta, Dallas and Austin, Texas, continue to generate significant construction activity. Expect backlog to remain lengthy as communities impacted by last year’s storms continue to rebuild.

— Backlog in the Northeast fell after expanding for five consecutive quarters. Large cities along the northeast corridor continue to attract commercial investment, including the suburbs of Baltimore. Despite the first quarter decline in backlog, the region’s reading remains elevated by historical standards.

 — Backlog in the Middle States is down 12.6% for the quarter (more than a full month) and 14.7% year over year. Weather played a role, but other factors are at work. Tariffs and threats of trade wars impact this region disproportionately given its central role in the nation’s industrial production.   

 — Backlog in the West surged to its highest level since mid-2014. Rebuilding from prior wildfires likely played a role, but the bigger reason relates to surging technology sectors in San Jose, Calif., San Francisco, Seattle, Portland, Ore., Los Angeles and San Diego. 

 

 

 Highlights by Industry  

 — Backlog in the commercial/institutional segment fell for the first time since the end of 2016. Despite the 8.8% quarterly decline, backlog in this segment remains 3.2% higher than the same time one year ago. However, this sector is vulnerable to further declines given its significant exposure to rising borrowing costs, higher materials prices and growing concerns regarding product saturation in a number of first-tier American real estate markets.

— Average backlog in the heavy industrial category rebounded during the first quarter, expanding 13.5%. Despite this sizable increase, the segment remains roughly unchanged at historically low levels on a year-over-year basis. Construction spending related to manufacturing has been drifting lower for months. While there have been some highly visible announcements regarding large capital projects in this segment, concerns regarding trade wars are likely to suppress backlog to a meaningful degree.  

— Backlog in the infrastructure category drifted back to Earth during the first quarter, declining by more than two months from levels observed during the fourth quarter of 2017. This reading may have been impacted by a sharp increase in survey participation. Weather likely played an even larger role. The expectation is that backlog in this category will expand for the balance of the year as improving state and local government finances spur more investment in education, public safety, highway/street and other publicly financed categories.

 

 

 Highlights by Company Size 

— Large firms—those with annual revenues in excess of $100 million—experienced a sharp decline in backlog. This overlapped neatly with the decline in backlog related to infrastructure. Backlog for these large firms remains higher than any other classification considered in this release.

— Backlog among firms with annual revenues between $50 million and $100 million increased 0.4 months during the first quarter and currently stands at its second highest level since the series began in 2008. This group is heavily impacted by certain construction segments that have experienced little interruption in construction spending momentum.

— Firms with between $30 million and $50 million in annual revenues experienced a sharp decline in first quarter backlog. Enhanced survey participation likely explains part of this result. This group is significantly exposed to the energy sector, which stands to see an uptick in activity given recent trends in oil prices.

— Backlog for firms with annual revenues of less than $30 million increased 0.3 months during the first quarter and remains remarkable steady. This stability is likely the product of a dearth of available subcontractors to do electrical, mechanical, glass installation and other forms of work.

CBI is a leading economic indicator that reflects the amount of construction work under contract, but not yet completed. CBI is measured in months, with a lengthening backlog implying expanding demand for construction services. More CBI charts and graphs are available on abc.org.

Related Stories

Market Data | May 2, 2023

Nonresidential construction spending up 0.7% in March 2023 versus previous month

National nonresidential construction spending increased by 0.7% in March, 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 $997.1 billion for the month.

Hotel Facilities | May 2, 2023

U.S. hotel construction up 9% in the first quarter of 2023, led by Marriott and Hilton

In the latest United States Construction Pipeline Trend Report from Lodging Econometrics (LE), analysts report that construction pipeline projects in the U.S. continue to increase, standing at 5,545 projects/658,207 rooms at the close of Q1 2023. Up 9% by both projects and rooms year-over-year (YOY); project totals at Q1 ‘23 are just 338 projects, or 5.7%, behind the all-time high of 5,883 projects recorded in Q2 2008.

Market Data | May 1, 2023

AEC firm proposal activity rebounds in the first quarter of 2023: PSMJ report

Proposal activity for architecture, engineering and construction (A/E/C) firms increased significantly in the 1st Quarter of 2023, according to PSMJ’s Quarterly Market Forecast (QMF) survey. The predictive measure of the industry’s health rebounded to a net plus/minus index (NPMI) of 32.8 in the first three months of the year. 

Industry Research | Apr 25, 2023

The commercial real estate sector shouldn’t panic (yet) about recent bank failures

A new Cushman & Wakefield report depicts a “well capitalized” banking industry that is responding assertively to isolated weaknesses, but is also tightening its lending.

Architects | Apr 21, 2023

Architecture billings improve slightly in March

Architecture firms reported a modest increase in March billings. This positive news was tempered by a slight decrease in new design contracts according to a new report released today from The American Institute of Architects (AIA). March was the first time since last September in which billings improved.

Contractors | Apr 19, 2023

Rising labor, material prices cost subcontractors $97 billion in unplanned expenses

Subcontractors continue to bear the brunt of rising input costs for materials and labor, according to a survey of nearly 900 commercial construction professionals. 

Data Centers | Apr 14, 2023

JLL's data center outlook: Cloud computing, AI driving exponential growth for data center industry

According to JLL’s new Global Data Center Outlook, the mass adoption of cloud computing and artificial intelligence (AI) is driving exponential growth for the data center industry, with hyperscale and edge computing leading investor demand.

Healthcare Facilities | Apr 13, 2023

Healthcare construction costs for 2023

Data from Gordian breaks down the average cost per square foot for a three-story hospital across 10 U.S. cities.

Higher Education | Apr 13, 2023

Higher education construction costs for 2023

Fresh data from Gordian breaks down the average cost per square foot for a two-story college classroom building across 10 U.S. cities.

Market Data | Apr 13, 2023

Construction input prices down year-over-year for first time since August 2020

Construction input prices increased 0.2% in March, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data released today. Nonresidential construction input prices rose 0.4% for the month.

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