By Jack Keough
Associated Builders and Contractors (ABC) today reported that its Construction Backlog Indicator (CBI) remained unchanged at 8 months from the third quarter through the fourth quarter of 2012; however, it is up 2.4% compared to a year ago. CBI is measured in months and reflects the amount of construction work under contract, but not yet completed by nonresidential contractors.
“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,” said ABC Chief Economist Anirban Basu. “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,” Basu said. “As the president and Congress struggle to agree on ways to reduce the federal government’s large deficits, this debt presents major issues for contractors in the form of higher future interest rates and slower long-term expansion.”
The report also said:
- 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 and West.
- The South reports the lengthiest backlog of any region at 8.91 months, but has not improved during the past year (8.92 months during the fourth quarter of 2011).
- Construction backlog in the West rose by 1.72 months in 2012—the most significant increase among all regions.
Associated Builders and Contractors (ABC) is a national association with 72 chapters representing 22,000 merit shop construction contractors and construction-related firms.
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Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at john.keough@comcast.net or keoughbiz@gmail.com
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