ABC: Q1 construction backlog grows in all categories

Dive Brief:

The Associated Builders and Contractors' first-quarter 2017 Construction Backlog Indicator (CBI) showed an increase of 8.1% to nine months from the fourth quarter of 2016. Year-over-year, backlog was up 0.4 months, or 4%.
This was the first time in the history of the CBI that all categories demonstrated growth, according to ABC Chief Economist Anirban Basu. The Western U.S. (+25.6% to 7.78 months) and firms with revenues of between $30 million and $50 million (+24.5% to 10.28 months) were the quarter's standouts.
The South still has the strongest backlog at 9.83 months, although it is lower than the 10 months-plus backlogs that the region boasted in many previous CBI reports. Although the West showed the most growth last quarter, backlogs were higher in the Middle States (8.53 months) and the Northeast (8.68 months).

Dive Insight:

While 2017 is shaping up to be a good year for the construction industry, there is some concern on the part of contractors about future activity into 2019 and 2020, Basu noted. Those worries are based on the current lengthy recovery period, some overbuilt segments of the commercial market, weak public spending and tougher lending requirements. Based on the strength of the first quarter, however, Basu said some concerns might be overstated.

In industry highlights, office and hotel construction has boosted the commercial/institutional category backlog to 8.9 months, its highest level since 2014. This activity has served as a counterbalance to overbuilding in some metros and continuing retail store closures.

What has not yet materialized is a major boost in infrastructure spending that many firms expected to be getting started soon — most likely in association with President Donald Trump's promised $1 trillion infrastructure plan — although infrastructure backlog increased in the first quarter.

The CBI is a leading indicator of future construction activity, as is the Dodge Momentum Index. The latest Dodge Momentum Index report was also positive, reflecting a May increase of 4% to a reading of 139.1. Dodge reported that the institutional segment was up 2.9%, while the commercial segment was up 4.8%.