Construction backlog shortens

A measure of construction activity in the United States declined in the fourth quarter of 2011, but remains well ahead of last year.

Associated Builders and Contractors reported that its Construction Backlog Indicator (CBI) fell from 8.1 months to 7.8 months. The latest reading is 3.2 percent lower than the third quarter of 2011, but almost 11 percent higher than the fourth quarter of 2010.

The CBI measures the amount of nonresidential construction work under contract to be completed in the future. The longer the backlog, the more activity the measure forecasts.

Over the past year, the CBI rose nearly a third of a month to 6.11 months in a western region of the U.S. that includes Colorado. Regional readings also were up in the middle states and Northeast. The South had the longest backlog of all at 8.92 months.

“Overall, the latest CBI numbers indicate a degree of stalling in the recovery of the nation’s nonresidential construction industry likely due to a combination of the soft patch that developed in the broader economy early last year, a number of seasonal factors and the winding down of federal stimulus projects,” said Anirban Basu, chief economist for the ABC, a national trade association of construction and construction-related firms.

At the same time, though, Basu said the recent acceleration in economic and job growth could bolster construction activity.

An expansion in privately funded construction has benefited smaller firms even as larger firms have been affected by a contraction in publicly funded projects, Basu said. “Early in the recovery, the lion’s share of construction work seemed to favor firms with annual revenues in excess of $50 million. This has much to do with federal infrastructure spending. As the economic recovery has broadened to encompass more construction segments, work has steadily spread to smaller firms — a trend that is likely to continue.”

On a regional basis, the disparity between construction activity has increased with the largest gap between the West and South, a difference of almost three months in the fourth quarter of 2011.

“The South appears to be the region most positively impacted by rebounding nonresidential construction, largely due to its central importance to the nation’s energy industry,” Basu said. “The West continues to deal with many issues, including the impact of weak residential real estate markets and stressed state fiscal conditions, both of which impact the vitality of broader regional economies.”