ABC: Construction backlog no longer growing

WASHINGTON, D.C. – Associated Builders and Contractors (ABC) reports that its latest Construction Backlog Indicator (CBI) remained virtually unchanged in mid-summer.

Based on a national survey of ABC members, construction backlog stood at 7 months in June and 7.3 months in July – up 20.4 percent from July 2009, but down 1.2 percent from CBI’s historic high of 7.4 months in April 2010.

“Construction backlog is no longer expanding despite the fact that backlog related to infrastructure continues to increase. This suggests that the recovery of privately financed activities remains slow,” said ABC Chief Economist Anirban Basu. “There are no indications, however, that overall construction business volume has begun to shrink; merely that backlog is no longer advancing.

“The U.S. economic recovery is now roughly 12 months old. Nonresidential construction activities typically lag the overall economy by 12 to 24 months, with the implication that privately financed activities should soon begin to show signs of a rebound.

“However, there are reasons to believe that this moment in economic history will be a bit different from other economic recoveries due to a number of factors, including still rising office vacancy rates in many parts of the nation, extraordinarily slow job creation, tight credit and fears that the economic recovery will not persist. Therefore, the future path of the CBI is a mystery because construction’s recovery remains far from guaranteed.”

Compared to a year ago, all regions except for the West experienced a rise in construction backlog.