Despite Dip, South Still Leads in Future Construction Projects

The Association of Builders and Contractors says the Southern region, which includes Arkansas, continues to report the nation’s lengthiest construction backlog despite a slight drop in the second quarter.

The ABC’s Construction Backlog Indicator, released Aug. 14, showed the South had a commercial construction backlog of 8.75 months for the quarter, compared to 8.88 months in the previous quarter.

The indicator measures the amount of nonresidential construction work under contract. A backlog of less than eight months is statistically associated with construction spending declines, while a backlog of more than eight months indicates future spending increases.

The West registered the largest gain among the four regions, with construction backlog rising from 6.6 months to 7.5.

ABC chief economist Anirban Basu wrote in the report that the South’s strength remains in commodity-related production, including food processing and oil and natural gas, as well as investment in manufacturing plants and equipment.

“However, average backlog has declined for three consecutive quarters in the South,” he wrote, “which may be due to a bit of a slowdown in energy-related investment because of the low price of natural gas.”