ABC: Construction backlog for largest US contractors soars to record-breaking pace

Dive Brief:

The 2016 first-quarter backlog of nonresidential construction projects decreased 0.8% from the fourth quarter of 2015 to 8.6 months, but backlog for the country's largest contractors hit an all-time Construction Backlog Indicator (CBI) high of 12 months and, year over year, backlog increased 2.7%, according to the Associated Builders and Contractors.
The South is once again the regional winner with a 10-month backlog for three straight quarters, a first for any region tracked by the CBI .
Infrastructure, due in part to the FAST Act and new state and local programs, also broke a CBI record with a backlog of more than 11 months for two quarters in a row, although that sector experienced slight declines in the first quarter.

Dive Insight:

Aside from the South's continued record-breaking performance, regionally, the Middle State cities of Minneapolis and Detroit started to make up for the beating that region took with the decline of the energy sector, bringing backlog to a record high of 7.6 months. The auto industry and foreign investment in industrial also drove performance in that region.

E-commerce-related construction is behind the Northeast's eight-month backlog, and the West's backlog for infrastructure projects "slipped" but still remains elevated due to technology-driven and other private construction.

The ABC reported that the ability of the largest contractors ($100+ million annual revenue) to win "signature" projects has helped them overcome the industrywide problem of labor shortages, permitting them to gain more work, which would help explain their average backlog of 12 months. In fact, backlog among contractors with $50 million to $100 million in revenue fell, partially due to those largest, strongest firms taking over what would normally be the smaller companies' work. Contractors at other revenue levels ($30 million-$50 million) have reported backlogs of more than seven months for almost a year, and subcontractor backlog have held steady.

Even though contractors, regions and industries continue to break CBI records, ABC Chief Economist Anirban Basu said contractors, overall, are not busier, but instead, the level of construction activity remains at a steady, elevated level.