Construction backlog reached 7 months in May, a 27 percent increase compared to January, ABC reported July 20 in its Construction Backlog Indicator (CBI).   

“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,” said ABC Chief Economist Anirban Basu.  

Compared to one year ago, all regions across the country experienced a rise in backlog, with the exception of the South.  The Northeast reported the highest backlog in May  of 7.5 months, and the Middle States had the shortest backlog in May of 6.6 months, which is still one month higher than May 2009.  

“As a greater share of stimulus-financed projects moves from money-obligated status to groundbreaking status, the expectation is that the improvement observed in recent months will continue in all major regions of the nation,” Basu said.  

By industry, commercial and institutional construction dropped from 7.2 months in April to 6.9 months in May and heavy industrial construction reported a backlog of 7.86 months – the highest in the history of the CBI.  Infrastructure construction has the longest backlog of 8.75 months.  

Firms with more than $100 million in annual revenue still report the longest backlog at 9.4 months and firms with revenue between $30 million and $50 million saw their backlog decline by half a month between April and May.  Compared to one year ago, firms with revenue less than $30 million saw a 1.3 month increase in backlog in May.  

“For the first time, there is indication of a broadening nonresidential construction recovery, perhaps a reflection that credit conditions are beginning to thaw and that the broader economic recovery is finally being reflected in privately financed nonresidential construction activities,” Basu said. “However, there is still reason to doubt the sustainability of the emerging nonresidential construction recovery for a variety of reasons, including ongoing underperformance of commercial real estate.” 

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