Construction Backlog up 3.5 Percent in Third Quarter of 2012

Construction Backlog up 3.5 Percent in Third Quarter of 2012

Industry Highlights In the third quarter, construction backlog rose for all three industrial segments except for infrastructure, a category in which measured backlog is virtually equal to a year ago. Backlog for the heavy industrial category expanded by four-fifths of a month during the third quarter and now stands at 6.73 months. Backlog in this category has not been this high since the second quarter of 2010. Backlog in the commercial and institutional category rose for a second consecutive month, spurred by ongoing increases in consumer spending and renewed expansion plans among several key retailers.

 Analysis “The infrastructure category is the most susceptible to the impending fiscal cliff,” said Basu. “It is the only category that did not experience rising backlog during the third quarter. “With the exception of the commercial construction category, average backlog among construction firms is roughly the same as two years ago, a reflection of just how soft the nonresidential construction recovery has been for many contractors,” Basu said. “The presumption is that progress will continue to be gradual during the initial quarters of 2013, but there is a possibility many projects postponed in 2012 due to elevated levels of uncertainty will come back online next year, spurring more rapid overall nonresidential construction recovery during the second half of 2013.”

 For Industry trend data, go here. Highlights by Company Size Construction backlog rose across all company size categories, with firms reporting annual revenue between $30 million and $50 million registering the largest quarterly gain of 1.8 months. CBI data indicate specialty trade contractors with annual revenues in excess of $30 million have experienced the greatest improvement. Firms with annual revenues of less than $30 million continue to struggle; this is the only segment with construction backlog below year-ago levels.

Analysis “Backlog rose for all size categories during the third quarter,” said Basu. “Part of this may be explained by the failure of competitors, which positions survivors to expand market share and backlog. “In general, larger firms, which tend to have more solid banking and insurance relationships, appear best positioned to gain market share by taking on larger projects,” Basu said. “The fragile nature of smaller firms may help explain why these contractors are alone in terms of experiencing a year-over-year decline in average backlog.” For Company Size trend data, go here. To read more about the latest CBI, click here. Associated Builders and Contractors (ABC) is a national association with 74 chapters representing merit shop construction contractors and construction-related firms.

(Source: Business Wire )
(Source: Quotemedia)