Federal spending hasn’t help small construction firms
Associated Builders and Contractors recently released its nationwide study of construction project backlog activity. The findings indicate that infrastructure investment has improved construction activity in the heavy construction and industrial sectors, but commercial and institutional construction continues to suffer.
The Construction Backlog Index is a forward-looking measurement of the amount of construction work currently contracted to be completed in the future. ABC Chief Economist Anirban Basu stated “despite the massive amount of federal dollars involved, smaller construction firms continue to suffer abnormally short backlogs.” The data shows construction activity overall is down 18 percent from a year ago.
Unfortunately for middle America, construction backlog is weaker here than in other regions of the United States. The CBI report states that “the Middle States continue to suffer the shortest average backlog at 4.9 months, largely a reflection of the ongoing economic malaise impacting the upper Midwest.”
The CBI report notes the following regional highlights:
• Backlog in November 2009 in all four regions of the U.S. remains below levels from November 2008.
• November 2009 average backlog, compared to October 2009, expanded in the South and Middle States while declining in the West and Northeast. This is consistent with broader economic data that indicate the most forceful economic recoveries are taking place in commodity-intensive states such as Nebraska, South Dakota, Louisiana and Mississippi.
• The average backlog in the South is now 6.5 months, the longest of any region.
• Despite recent improvement, the Middle States continue to suffer the shortest average backlog at 4.9 months, largely a reflection of the ongoing economic malaise impacting the upper Midwest.
“While it appears the worst is over for the construction industry, stimulus has not been all that stimulating. We need an improvement in the labor market coupled with a strengthening of the commercial development sector before a broad based recovery can be sustained.
Jim Kistler is President and CEO of the ABC Heart of America Chapter.