• News
  • General

Construction backlog in West drops in 4Q, up from a year ago

The construction backlog shrunk in the West during the fourth quarter of 2012, but still saw growth compared to the previous year, according to the latest Associated Builders and Contractors Construction Backlog Indicator report.

The West reported a construction backlog of 7.83 months in the fourth quarter of last year. This is down from the third quarter of 2012 when it was 8.93 months. The West saw the largest jump out of the four regions in the third quarter of last year, increasing 1.43 months from the second quarter of 2012.

In the fourth quarter of 2011, backlog in the West was at 6.11 months. The 1.72 months of growth was the most significant increase among all four regions, year-over-year.

“Better economic performances in markets such as San Jose, Los Angeles, Seattle, Phoenix and Las Vegas have positioned the West to enjoy better-than-average recovery,” said Anirban Basu, ABC chief economist, in a statement. “Though the region is still hamstrung by delicate public finances in states that were hit particularly hard by the nation’s housing downturn.”

The construction backlog rose from the third quarter to the fourth quarter of 2012 in the Northeast and the South, while slipping in the middle states.

The South reported the lengthiest backlog of any region at 8.91 months and it has not improved during the past year, posting an 8.92-month backlog during the fourth quarter of 2011.

ABC’s Construction Backlog Indicator also tracks three industry sectors: commercial and institutional, heavy industrial and infrastructure.

Infrastructure projects grew 0.52 month to 9.81 months of backlog from the third to fourth quarter of 2012. Commercial and institutional backlog increased by 0.10 months to 8.13 months last quarter.

“Backlog in the commercial construction category increased for a third consecutive quarter, a reflection of ongoing recovery in consumer spending -- including tourism, and growth in professional services employment,” Basu said.

Construction backlog in the heavy industrial segment thinned by half a month from the third quarter to the fourth quarter of 2012, falling from 6.73 months to 6.23 months.

All three industry segments experienced increases in construction backlog compared to a year ago.

The largest year-over-year increase in backlog was in the infrastructure segment, where backlog rose by 0.63 months.

“The year-over-year expansion in infrastructure is reflective of growing construction spending in categories such as power, utilities and transportation,” Basu said.

During the fourth quarter, construction backlog declined for all firm categories except those with annual revenue in excess of $100 million.

The largest firms, those with annual revenues greater than $100 million, reported a backlog of 10.80 months.

On a year-over-year basis, all firms except for those in the smallest category, with annual revenue below $30 million, experienced increases in backlog.

Firms with annual revenue between $30 million and $50 million registered the largest annual gain -- 2.5 months. Basu said this is consistent with the fact that much of the improvement during the past year has occurred among subcontractors in this revenue category.

The Construction Backlog Indicator is based on a survey sent to Associated Builders and Contractors members. There are 72 chapters representing 22,000 contractors and construction firms in the United States.

The Construction Backlog Indicator (CBI) showed no change at eight months in the fourth quarter and stands 2.4 percent higher than the fourth quarter 2011. “CBI failed to rise during the fourth quarter of last year, a reflection of numerous factors, including fiscal cliff fears, highly constrained public capital budgets and lackluster macroeconomic growth. However, backlog did not decline, suggesting that nonresidential construction spending is likely to remain flat during the initial months of 2013 and then possibly trend higher during the latter part of the year. There are myriad sources of risk to the nonresidential construction outlook, including automatic sequestration, which likely would result in a pullback in federally financed construction projects,” said Associated Builders and Contractors Chief Economist Anirban Basu. The CBI is a forward-looking economic indicator measuring the amount of construction work under contract to be completed in the future. Source: Associated Builders & Contractors | Compiled by Jenny Ross

User Response
0 UserComments