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Construction backlogs rise — except in South

WASHINGTON, D.C. – Associated Builders and Contractors (ABC) reports that its latest Construction Backlog Indicator (CBI) increased to seven months in May – a 27 percent increase from January of this year.

However, the South’s backlog did not increase

CBI is a forward-looking indicator that measures the amount of construction work under contract to be completed in the future.

“Construction backlog continues to edge higher and has generally been on an upward trajectory since late-2009,” said ABC chief economist Anirban Basu. “But it’s not clear whether this level can be sustained.

“While this latest data indicate a broader improvement in nonresidential construction activity, there may be several alarming reasons for the increase including the financial failure of competitor firms leaving more opportunities for surviving companies, or contractors accepting projects with lower profit margins.

“Backlog in the infrastructure category remains relatively high and there was improvement over the past two months in the commercial/institutional and heavy industrial categories, as well. However, whether the nonresidential construction rebound will continue to strengthen and broaden for the remainder of 2010 remains to be seen,” said Basu.

Compared to a year ago, all regions but the South experienced a rise in backlog.

As of May 2010, the Northeast reports the lengthiest backlog at roughly 7.5 months, the highest level for this region in the history of the survey.

The Middle States report the shortest backlog at roughly 6.6 months. However, that represents a significant improvement over the 5.6 months in May 2009.

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