Construction backlogs in the Midwest declined by 13%, from 6.34 months to 5.51 months, in the first quarter of 2013, according to year-over-year data compiled by Arlington, Va.-based Associated Builders and Contractors (ABC). The period marked the second consecutive quarter of declining backlogs in the region, a trend ABC attributes to slow growth in states such as Illinois and Wisconsin.
“The economies of those two states are among the most fragile in the nation,” says ABC Chief Economist Anirban Basu.
At present, Midwest backlogs are at their lowest levels in three years, according to ABC data.
All other regions showed positive growth in the first quarter, though backlogs declined 1.1% nationwide during the same period.
“As with the broader economic recovery, the rebound of the nation’s non-residential construction industry remains sporadic and stymied by a myriad factors, including tight credit, heightened caution among private developers and public policymakers, and a still struggling global economy,” says Basu.
“Because a growing number of projects are now in various stages of planning, the expectation is that backlog will expand moderately later in 2013, but construction volumes will be roughly flat for the balance of the year,” Basu notes. “Certain nonresidential construction segments, such as energy generation, infrastructure, retail and lodging, appear to be doing well, but, this activity alone is not enough to counter the poor performance of other construction sectors, and is unable to expand rapidly in the absence of a dynamic economic recovery.”
ABC's Construction Backlog Index is measured in months and reflects the amount of commercial and industrial construction work under contract, but not yet completed.