Contact: Gerry Fritz, (703) 812-2062 Marcie Kohenak, (202) 965-7811 |
For Immediate Release
February 19, 2013
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WASHINGTON, D.C. – Associated Builders and Contractors (ABC) today reports 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 percent 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.”
Regional Highlights
“The large jump in CBI in the West during the third quarter was not repeated during the fourth quarter,” said Basu. “Better economic performances in markets such as San Jose, Calif., Los Angeles, Seattle, Phoenix and Las Vegas have positioned the West to enjoy better than average recovery, though the region is still hamstrung by delicate public finances in states that were hit particularly hard by the nation’s housing downturn.
“The Middle States also did not experience enhanced backlog during last year’s final quarter,” Basu remarked. “This may be attributed to a loss of momentum in industrial production during the latter part of 2012. However, given America’s growing appetite to produce, the Middle States appear positioned for continued gradual recovery during the next year.
“In the South, there was a renewal of momentum during the fourth quarter, due in part to improving economic circumstances in Florida and Georgia,” Basu added. “Backlog increased in the Northeast for a third consecutive quarter, and may be partially attributable to improved bank balance sheets in that part of the nation, helping to accelerate lending for commercial real estate projects.”
Industry Highlights
“The decline in heavy industrial CBI is consistent with the recent loss of momentum in the nation’s industrial production growth,” stated Basu. “The export environment has been challenging in a number of product categories due to global economic deceleration during the past two years, which explains some of the lost momentum.
“Backlog in the commercial construction category increased for a third consecutive quarter, a reflection of ongoing recovery in consumer spending, including tourism, and growth in professional services employment,” Basu said. “The year-over-year expansion in infrastructure is reflective of growing construction spending in categories such as power, utilities and transportation.”
Highlights by Company Size
“The smallest firms continue to face the shortest backlog and greatest uncertainty,” said Basu. “Construction backlog among this group actually has declined during the past 18 months.
“In general, larger general contractors and subcontractors, which tend to have more solid banking and insurance relationships, appear best positioned to gain market share by taking on larger projects,” said Basu. “The fragile nature of smaller firms may help explain why these contractors are alone in terms of experiencing a long-term decline in average backlog.”
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Associated Builders and Contractors (ABC) is a national association with 72 chapters representing 22,000 merit shop construction contractors and construction-related firms. Visit us at www.abc.org.
Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020. All previously reported quarters and months shifted forward by one period to better reflect the timing of when the surveys were conducted.