In markets where labor continues to be in short supply, contractors that can attract and retain workers are capable of accepting projects that other manpower-deficient competitors might be turning away.
Labor availability is an important distinction in a construction market that âhas stabilized at a comfortable level.â The backlog for the nationâs largest contractors stands at a record 12 months, according to the latest estimates from Associated Builders and Contractors (ABC), a national trade association representing 70 chapters with nearly 21,000 members.
The groupâs Construction Backlog Indicator, which has measured the national backlog average for every quarter since Q2 2009, stood at 8.6 months, compared to 8.7 months in Q4 2015 and 8.5 months for Q1 2015.
Where contractor backlogs in the Midwest increased by double digit percentages in the latest quarter measured, they fell in the Northeast, South, and West compared to the previous quarter.
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ABC's latest Construction Backlog Index shows that contractors in the Midwest saw the biggest change in their backlogs during the first quarter of this year, as did companies whose revenues range from $50 million to $100 million. Image: Associated Builders and Contractors.Â
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However, contractors in the South have reported average backlogs in excess of 10 months for three consecutive quarters, which is unprecedented in the history of ABCâs series. And while the Northeast isnât expanding, the region âcontinues to experience a considerable volume of activity related to commercial development,â including ecommerce fulfillment centers, said ABC.
Backlogs for Commercial/Institutional (which have exceeded eight months for 3½ years), and heavy industrial were up in the most recent quarter tracked, where infrastructure backlogs, while outpacing other sectors at 11.2 months, were down slightly. âThe passage of the FAST Act and growing focus among many state and local government policymakers should allow backlog in the infrastructure category to remain elevated,â ABC stated.
Companies with more than $100 million in revenue reported an average 12.25 months of backlog, representing a 3.8% gain over the previous quarter, which itself had set the previous record.
Apparently, the largest firms have recently been taking market share primarily from companies in the $30 million to $100 million range, which reported backlog declines. Companies under $30 million in revenue, on the other hand, enjoyed a modest backlog increase, and have collectively reported backlogs in excess of seven months for 11 consecutive quarters.
âMost contractors continue to express satisfaction regarding the amount of work they have under contract. Â This is of course truer in certain parts of the nation than others,â said Anirban Basu, ABCâs Chief Economist.
Indeed, backlogs in the West slipped in the latest quarter, even as technology generates âprofound levels of activityâ in markets like San Jose, Seattle, and San Diego.
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ABC's data track a steady increase in national average backlogs dating back to the second quarter of 2009. Image: Associated Builders and Contractors.
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