ABC's Construction Backlog Up 4.5 Percent in First Quarter of 2010

Many forces at work that suggest that the sector's recovery may not be sustained as stimulus monies are steadily drawn down. Commercial construction remains weak due to high vacancy rates and tight credit. Courtesy of Adam Marsden Building Services

While the Construction Backlog Index (CBI) rose in all areas of the country except the West from February to March, the Northeastern United States is the only region to see a higher backlog when compared to March 2009. CBI is a forward-looking indicator that measures the amount of construction work under contract to be completed in the future.

''The fact that the CBI is on the rise illustrates that the improvements recently seen in various other indicators, including construction spending, will continue through much of the balance of 2010,'' said ABC Chief Economist Anirban Basu. ''However, the overall impact of the recession may not be at an end or approaching an end. It remains too soon to tell whether the current momentum will continue through 2011.''

The Northeast presently enjoys the highest construction backlog at 7.31 months in March 2010. The South and Middle States have also been experiencing a rise in backlog, but are still down compared to the same time last year. In the West, backlog stands at 5.76 months in March 2010, roughly the same level as in August 2009, and has yet to demonstrate significant momentum.

''As an indicator, the nonresidential construction industry tends to lag the overall economy by 12 to 24 months,'' said Basu. With the broader economy having been in recovery for the better part of a year, and with stimulus spending still having an impact, the expectation is that for now, backlog will remain stable or better in the months ahead.

- Courtesy of Associated Builders and Contractors