Construction Backlog Rebounds in Third Quarter, ABC Says

WASHINGTON, D.C.–  Construction backlog expanded during the third quarter, led by strong growth in the commercial/industrial sector, according to Associated Builders and Contractors’ recently released Construction Backlog Indicator. The increase during the third quarter follows two quarters of decline in backlog—the amount of work under contract but yet to be performed—that led to speculation that growth in the country’s nonresidential construction industry was slowing.

Overall backlog expanded to 8.7 months, up 2 percent from the second quarter and 2.2 percent (0.2 months) on a year-over-year basis.

“Despite growing concern that certain commercial segments in a handful of major U.S. cities are on the path to overbuilding, commercial construction backlog improved during the summer of 2016,” said ABC Chief Economist Anirban Basu. “The ongoing expansion of spending on healthcare has also helped to expand institutional construction volumes.

“However, exports have been sagging in the context of a disappointing global economic recovery and strong dollar,” said Basu. “Business investment in the U.S. has been weak, though there have been more recent indications of improvement. This improvement was not fully apparent in third quarter data, and industrial construction backlog declined during the quarter.

“Perhaps the biggest news is that infrastructure-related backlog is on the rise,” said Basu. “Despite the passage of a federal highway bill in 2015 and a growing consensus that America’s expanding infrastructure deficits must be aggressively countered, infrastructure spending in America has been in decline for much of 2016. According to U.S. Census Bureau data, over the past year public spending has declined in water and sewer categories, the highway and street segment, public safety and in transportation. The rise in backlog suggests that this negative trend will soon turn positive. The outcome of the most recent presidential and congressional elections renders the outlook for near-term infrastructure spending more promising.

Read more on ABC’s website.