Midwest Backlogs Point to Continuing Growth in Region
Midwest construction backlogs continued to rebound in the third quarter, rising from 6.42 months to 6.92 months – a 7.9% increase – in quarter-to-quarter comparisons, according to data compiled by Washington, D.C.-based Associated Builders and Contractors. Midwest backlogs additionally rose by 12.7% in quarter-over-quarter comparisons.
Strong showings in the Midwest, West and Northeast propelled national backlogs to 8.8 months in the third quarter, an all time high, eclipsing the previous record of 8.5 months in the second quarter of 2014.
“Recent data regarding nonresidential construction and employment has shown only sporadic gains, which is consistent with the less optimistic backlog readings registered earlier this year,” says ABC Chief Economist Anirban Basu. “But the last two quarters tell a positive story that the average nonresidential contractor in America is positioned to get busier.”
By region, backlogs were highest in the Northeast (10.17 months), followed by the West (9.42 months) and the South (8.98 months). While all four regions showed growth in quarter-to-quarter comparisons, backlogs in the South declined in quarter-over-quarter comparisons. ABC expects conditions in the region to improve due to recent acceleration of growth in Louisiana, Georgia and Florida, Texas, among other states.
“Given the recent acceleration in job growth, the improvement in the quality of jobs being added, and a still-accommodative Federal Reserve, the U.S. macroeconomic outlook for 2015 represents the most upbeat assessment of economic prospects during the post-recession period,” says Basu. “While there are a number of headwinds, including a still-shaky global economy and a meaningful dip in oil prices that is likely to impact both oil production and related capital spending, most leading indicators remain positive. Lending conditions appear to be easing and a booming stock market has generated both positive wealth and confidence effects.”