Dive Brief:

• The backlog of nonresidential construction projects fell 1.6% from the first quarter of 2016 to 8.5 months in the second quarter. Meanwhile, contractors with $100 million or more in annual revenue hit a new backlog high of 14.06 months during the period, according to the latest Construction Backlog Indicator from the Associated Builders and Contractors.

• Construction activity in Florida, Georgia and South Carolina has kept the South as the top regional performer, posting a project backlog of greater than 10 months for four consecutive quarters.

• Year over year, construction industry backlog has shown little movement, which the ABC attributes to an overall slowing of economic growth, particularly in the energy sector. Still, future backlog should stay steady between 8 and 9 months.

Dive Insight:

The South was the clear leader among the regions for project backlog. However, while the Northeast dropped 12.9% from the previous quarter to 7.13 months, the Middle States (up 5.9% to 8 months) and the West (up 31% to 7.15 months) gained ground. The high-volume of development in the Northeast since the recession's end could finally be seeding fears of market saturation in categories like office space, the ABC said. The Middle States have benefited from expansion in the automobile sector, while both public and private work in the West have increased in anticipation of population growth there.

Among project sectors, the ABC expects continued solid performance from the office, hotel and healthcare categories. The star of the second quarter, however, was the heavy industrial sector, with its highest-ever backlog level at nearly 7.44 months. The activity is occurring primarily in the Middle States, where the auto industry is finding renewed growth.

Most likely to be held back by skilled-labor shortages, firms with less than $30 million in annual revenue recorded a slight dip in backlog from the previous quarter to 7.25 months. These firms do not have the capacity of larger contractors, who are financially strong enough to weather market fluctuations, so any economic slowdown is likely to affect their future ability to bid on projects. Meanwhile, the ABC said that large-scale industrial projects are contributing to record backlogs for large contractors as they continue to gain market share.