, Sept. 17—Associated Builders and Contractors reports that its Construction Backlog Indicator
expanded to a record 9.9 months during the second quarter of 2018. Backlog is up 12.2 percent from the first quarter and 14 percent compared to the same time last year.
“Construction backlog has never been higher in the history of this series,” said ABC Chief Economist Anirban Basu. “While contractors collectively reported a higher backlog, it was the industrial contractor segment that had the largest increase in the second quarter. With industrial production rising and factory capacity utilization recovering, there is more demand for both improved and new industrial space. This was especially apparent among contractors in the southern United States, where backlog stands at 11.2 months and has increased 2.2 months over the past year.
“The disproportionate role played by technology companies in creating economic growth is also apparent in the data,” said Basu. “Contractors operating in tech-laden communities like San Jose, California; Seattle; Portland, Oregon; Provo/Salt Lake, Utah; and elsewhere continue to report very strong backlog. Given announcements of new, large-scale data centers and tech campuses, technology is positioned to be an ongoing driver of demand for construction services.
“During the first quarter we noted that there had been a significant uptick in survey participation that could have affected our findings due to shifting participant composition,” said Basu. “The second quarter was also characterized by elevated participation levels. It appears that higher participation is now the norm, and that the addition of survey participants has only served to render CBI a more reliable indicator.”
Highlights by Region
- •Backlog in the South increased by more than one month on a quarterly basis and now sits just below its all-time high established during the third quarter of 2017. Construction backlog expansion continues to be driven by the usual suspects, including rapidly expanding metropolitan areas like Dallas and Austin, Texas; Atlanta; Orlando and Tampa/St. Petersburg, Florida; Charleston, South Carolina; Nashville, Tennessee; and Raleigh-Durham, North Carolina.
- •Backlog in the Northeast rose to its highest level on record. Predictably, backlog growth continues to be led by strong commercial segments in the New York, Boston, Philadelphia, Washington and Baltimore metropolitan areas. There is also growing evidence of stronger construction activity in West Virginia and western Pennsylvania.
- •The exception to the general trend of growing backlog is the Middle States, where backlog is down 0.7 months on a year-over-year basis. Many factors are at work, including relatively softer employment growth in the Chicago, Detroit and St. Louis metropolitan areas. This is the part of the country that is most vulnerable to low agricultural commodity prices, which continue to restrain overall economic performance in states like Iowa and Nebraska.
- •Led by technology segments, backlog in the West continues to surge, up by an astonishing 3.9 months over the past year. Contractors in Seattle; Portland, Oregon; San Jose and Los Angeles, California; Denver; Salt Lake City; Boise, Idaho; and Phoenix can expect to remain ultra-busy for the foreseeable future, strongly suggesting that human capital shortfalls will continue to worsen.