Economist: South to See Growth In Future Construction Spending

The South had a nonresidential construction backlog of 9.27 months in the first quarter of the year — the lengthiest in the nation and the highest level for more than a year.

Anirban Basu, chief economist of the Associated Builders and Contractors, wrote in a recent report that the backlog for the Southern region, which includes Arkansas, is up from 8.88 months in the first quarter of 2012.

The ABC’s Construction Backlog Indicator measures the amount of commercial 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 first quarter dropped 1.1 percent to 7.9 months. However, it’s still 7.7 percent higher than it was a year ago.

The Northeast saw the most significant increase in backlog, which rose from 6.87 months in the first quarter of 2012 to 8.86 months.

Construction backlog in the Middle States fell to 5.5 months, its lowest level in three years. In the Western states, backlog rose from 6.57 months in the first quarter of 2012 to 7.11 months.

By sector, commercial and institutional construction backlog continue to expand, Basu wrote, in part due to declining vacancy rates in much of the country and rising hotel occupancy rates.

“Because the nation did not fall off of its fiscal cliff, infrastructure-related backlog remains relatively stable,” he wrote.

However, the heavy industrial category has been disappointing, he added.

“Because a growing number of projects are now in various stages of planning, the expectation is that backlog will expand moderately in 2013, but construction volumes will be roughly flat for the balance of the year,” Basu wrote.

ABC is a national trade association representing 22,000 members from more than 19,000 construction and industry-related firms.