Construction Backlog Indicator – Q2 2014

Construction Backlog Indicator - Q2 2014

Construction Backlog Indicator – Q2 2014

Associated Builders and Contractors (ABC) Construction Backlog Indicator (CBI) reached an all-time high in the second quarter of 2014. CBI improved 5.4 percent following a 2.8 percent decline in the first quarter and currently stands at 8.5; up 3.6 percent on a year-over-year basis.

“The long-awaited brisk nonresidential construction recovery may be upon us,” said ABC Chief Economist Anirban Basu. “Industry momentum was snuffed out by a seemingly endless winter, but the pace of industry recovery has been accelerating ever since. Backlog gains were nearly ubiquitous during the second quarter, with gains registered in every industry segment, in nearly all geographies and for firms of virtually all sizes.

“Further increases in construction backlog are likely given remarkably accommodative Federal Reserve policy even after five completed years of economic expansion, accelerated job growth and rising consumer confidence,” said Basu. “The nation has added roughly 2.5 million jobs over the past year, consistent with growing demand for space. Financing conditions have also improved, which should set the stage for more rapid nonresidential construction recovery in a number of key construction segments, including office (classified within commercial/institutional) and manufacturing (classified within heavy industrial) segments.”

Regional Commentary

Average backlog lengthened in three of the four regions during the second quarter with the South as the only region that experienced a decline. The Northeast now has the longest backlog in the country—which can partially be attributed to recoveries in Massachusetts and New York—after gaining more than a month of backlog in the first quarter. The West, which has recently added the highest proportion of high-wage jobs in the nation and is powered by markets like San Jose and Seattle, experienced the largest growth in backlog over the past year, improving by more than a month to its longest backlog in the history of CBI. The Middle States region reached its highest level since the end of 2012 and, with energy and industrial production moving higher, the stage is set for more rapid backlog recovery going forward.  

Regional Highlights

  • Backlog in the South has fallen just below 9 months, down from 9.14 months in the first quarter and from 9.05 months a year ago.
  • The Northeast’s backlog now stands at  9.36 months, which is still slightly below where it was this time last year (9.41 months), but an improvement from 8.34 months in the first quarter.
  • Backlog in the Middle States is now at 6.42 months compared to 6.32 months a year ago and 6.16 months in the first quarter of 2014.
  • The West’s backlog stands at 9.22 months, up significantly from 8.21 months on a year-over-year basis and 8.09 months from last quarter.

The Construction Backlog Indicator (CBI) is a forward-looking national economic indicator that reflects the amount of work that will be performed by commercial and industrial contractors in the months ahead. This new, national economic data set is the only reliable leading economic indicator offering this level of specificity focused on the U.S. commercial and institutional, industrial, and infrastructure construction industries.

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Company Information

Allen & Shariff provides Engineering, Construction, and Project Management services to clients worldwide. Allen & Shariff services include MEP DesignCommissioningGeneral ContractingProject ManagementGreen & Energy Consulting, and Project Financing. Allen & Shariff was founded in 1993 as an engineering consulting firm based in Columbia, MD. The company has evolved into a multi-discipline professional service provider worldwide. The skills of our people, our proven sub-consultants, and our commitment to quality service and client satisfaction make the Allen & Shariff team a valued and trusted partner.

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