The Associated Builders and Contractors’ Construction Backlog Indicator (CBI) declined 3.2% during the first quarter of 2015. Construction firms report a revenue-weighted average CBI of 8.4 months, 0.3 months below the fourth quarter 2014 reading. Year over year, the CBI has increased 4% from a first quarter of 2014 backlog of 8.1 months.
“Weather and a myriad of other factors always make the first quarter CBI difficult to interpret,” said ABC Chief Economist Anirban Basu. “A brutal winter may have postponed project-related work, including the signing of contracts. The first quarters of 2012 and 2014 also experienced CBI declines that effectively were reversed during the ensuing second quarters.
“However, there is a reason to believe seasonal forces were not the only factors in reducing the CBI,” Basu said. “Sharp reductions in oilfield investment impacted a number of companies in the Middle States, while firms in the West appear to have been disproportionately impacted by the West Coast port slowdown. Weather and the port slowdown represent temporary factors, implying that backlog should re-establish an upward trajectory during the months to come,” he added.
“Construction was hardly the only segment of the economy to be impacted by weather, labor disputes and lower energy prices,” said Basu. “The entire macro-economy failed to expand during the year’s initial quarter. Still, economic fundamentals remain relatively strong.
Job growth continues to expand, unemployment is below 6%, and wage gains are steadily building. With fuel prices still low, consumer spending is positioned to remain the primary driver of economic expansion. Residential construction also has picked up in recent months—even the single-family market showing signs of life.”