Commercial Projects Backlog Little Changed from Year Ago

The South continues to report the lengthiest nonresidential construction backlog in the nation, at 8.91 months, but remains essentially unchanged from a year ago, Anirban Basu, chief economist of the Associated Builders and Contractors, wrote in a recent report on the fourth quarter of 2012.

The region’s backlog stood at 8.92 months during the fourth quarter of 2011.

The ABC’s Construction Backlog Indicator measures the amount of construction work under contract to be completed in the future. 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.

Nationally, the CBI for the fourth quarter was eight months, up slightly from 7.8 months a year earlier.

Although Basu said in his third-quarter 2012 report the index was “signaling that nonresidential construction spending will accelerate by mid-2013,” his recent report states such spending “is likely to remain flat during the initial months of 2013 and then possibly trend higher during the latter part of the year.”

Smaller construction firms nationwide aren’t faring as well as their larger counterparts, Basu wrote. They’ve seen backlog decline over the last 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,” Basu wrote. “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.”