According to Associated Builders and Contractors (ABC), the Construction Backlog Indicator (CBI) for the fourth quarter of 2014 declined 0.1 months, or 1%. Despite the quarter-over-quarter decline, backlog ended the year at 8.7 months, which is still 4.4% higher than one year ago.
"Inconsistent growth in the volume of public work continues to suppress the pace of nonresidential construction; however, private construction momentum continues to build," said ABC Chief Economist Anirban Basu. "With hotel occupancy rising, office vacancy falling and demand for data climbing exponentially, a number of key private segments are positioned for rapid growth in construction spending this year.
"There are a number of factors that are likely to be beneficial to nonresidential contractors in 2015," said Basu. "First, although interest rates were expected to rise after the Federal Reserve ended its third round of quantitative easing, they have actually been trending lower—due to factors such as falling interest rates abroad and a strengthening U.S. dollar—which helps contractors with construction volume and borrowing costs. Second, materials prices have continued to fall—particularly inputs related to the price of oil, iron ore and copper. This also makes it more likely that construction projects will move forward and helps boost profit margins."
Regional Highlights
• Average backlog in the South is back above 9 months for the first time since the first quarter of 2014.
• Though backlog in the West fell sharply during 2014's final quarter, average backlog remains comparable to where it was a year ago.
• Both the Northeast and the Middle States registered levels of average backlog unseen during the history of the CBI survey.
Industry Highlights
• Average backlog in the commercial and institutional category is virtually unchanged over the past year, suggesting the pace of recovery will remain moderate overall.
• Infrastructure-related spending is likely to be brisk going forward primarily due to improved state and local government fiscal conditions.
• Heavy industrial average backlog remains in the vicinity of multi-year highs, but these readings do not fully reflect the impact of a stronger U.S. dollar, which may result in a slowdown in export growth and an associated softening in industrial investment.
Highlights by Company Size
• During the fourth quarter, backlog expanded for mid-sized companies with annual revenue ranging between $30 million-$100 million. These firms enjoyed approximately half a month expansion in their respective average backlogs during the fourth quarter.
• On the other hand, backlog for small firms (annual revenue less than $30 million) and very large firms (annual revenue greater than $100 million) declined 0.2 months and 0.5 months, respectively.
• Large firms appear to have been impacted by a slowdown in large project infrastructure spending in certain parts of the country, while smaller firms have been impacted by greater observed difficulty in obtaining bonding for projects in the context of accelerating small firm failure.
• Average backlog has increased by nearly three months or by more than three months for all firm size categories since the fourth quarter of 2009.
Related Stories
Building Team | Apr 4, 2017
Dispelling five myths about post-occupancy evaluations
Many assume that post-occupancy (POE) is a clearly-defined term and concept, but the meaning of POE in practice remains wildly inconsistent.
Structural Materials | Apr 3, 2017
Best of structural steel construction: 4WTC, Fulton Center, Pterodactyl win AISC IDEAS2 Awards
The annual awards program, sponsored by the American Institute of Steel Construction, honors the best in structural steel design and construction.
Reconstruction & Renovation | Mar 16, 2017
Pols are ready to spend $1T on rebuilding America’s infrastructure. But who will pick which projects benefit?
The accounting and consulting firm PwC offers the industrial sector a five-step approach to getting more involved in this process.
Contractors | Mar 15, 2017
Dan Ulbricht joins Skender Construction as Vice President
Ulbricht will be working with Skender’s executive leadership team to augment partnerships and expand new markets.
Contractors | Mar 9, 2017
5 reasons why Millennials are great for the construction industry
Millennials often are unfairly saddled with the dubious reputation for being entitled, disloyal, and self-centered, but it turns out that they are actually not that different from their older work colleagues, according to an FMI study.
Industry Research | Mar 7, 2017
These are the 10 most expensive cities in the world to build in
Paris, Frankfurt, and Macau are all on the list, but none of them are more expensive than the city in the number one spot.
Architects | Jan 4, 2017
The making of visible experts: A path for seller-doers in the AEC industry
Exceptional seller-doers have the ability to ask the right questions, and more importantly, listen.
Building Team | Jan 3, 2017
How does your firm’s hit rate stack up to the AEC competition?
If your firm is not converting at least a third of project proposals when competing for new work, it may be time to reassess your marketing tactics and processes.
Contractors | Dec 22, 2016
New commercial building energy code released
The update includes a new compliance path and significant technical changes affecting building envelope, and mechanical and lighting systems.
Contractors | Oct 13, 2016
Contractors’ financial performance improved in 2015
The Construction Financial Management Association’s latest survey found gains across the board, but notable variances by the size of the companies.
