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 | Oct 31, 2016

Nonresidential fixed investment expands again during solid third quarter

The acceleration in real GDP growth was driven by a combination of factors, including an upturn in exports, a smaller decrease in state and local government spending and an upturn in federal government spending, says ABC Chief Economist Anirban Basu.

Market Data | Oct 28, 2016

U.S. construction solid and stable in Q3 of 2016; Presidential election seen as influence on industry for 2017

Rider Levett Bucknall’s Third Quarter 2016 USA Construction Cost Report puts the complete spectrum of construction sectors and markets in perspective as it assesses the current state of the industry.

Industry Research | Oct 25, 2016

New HOK/CoreNet Global report explores impact of coworking on corporate real rstate

“Although coworking space makes up less than one percent of the world’s office space, it represents an important workforce trend and highlights the strong desire of today’s employees to have workplace choices, community and flexibility,” says Kay Sargent, Director of WorkPlace at HOK.

Market Data | Oct 24, 2016

New construction starts in 2017 to increase 5% to $713 billion

Dodge Outlook Report predicts moderate growth for most project types – single family housing, commercial and institutional building, and public works, while multifamily housing levels off and electric utilities/gas plants decline.

High-rise Construction | Oct 21, 2016

The world’s 100 tallest buildings: Which architects have designed the most?

Two firms stand well above the others when it comes to the number of tall buildings they have designed.

Market Data | Oct 19, 2016

Architecture Billings Index slips consecutive months for first time since 2012

“This recent backslide should act as a warning signal,” said AIA Chief Economist, Kermit Baker.

Market Data | Oct 11, 2016

Building design revenue topped $28 billion in 2015

Growing profitability at architecture firms has led to reinvestment and expansion

Market Data | Oct 4, 2016

Nonresidential spending slips in August

Public sector spending is declining faster than the private sector.

Industry Research | Oct 3, 2016

Structure Tone survey shows cost is still a major barrier to building green

Climate change, resilience and wellness are also growing concerns.

Industry Research | Sep 27, 2016

Sterling Risk Sentiment Index indicates risk exposure perception remains stable in construction industry

Nearly half (45%) of those polled say election year uncertainty has a negative effect on risk perception in the construction market.

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