Builder Optimism and Project Backlog Sees Increase, Says New Report

Construction project backlogs in both the commercial and institutional sectors, as well as in infrastructure, saw an increase towards the end of last year, says a new industry report.

Published by the Associated Builders and Contractors, the report indicates that while the project backlog for the heavy industry sector was markedly down from November, the overall national backlog average had marginally increased from 7.2 months to 7.3 months.

Those numbers were aligned with the commercial and institutional backlog, increase from 7.2 months in November to 7.3 months in December.

Infrastructure project backlogs increased from 8.7 months in November to 8.9, while only in the heavy industry sector was the backlog on the downside, from 4.5 months in November to 4.2 months in December.

The largest regional increases were in the Midwest, with a 6.0 backlog growing to 6.2 months, and a 7.1 backlog in the Northeast growing to 7.9 months.

The South saw a marginal decrease from a backlog of 8.4 months in November to 8.3; while the West saw the most significant change, from 7.8 months to 6.7 months.

The ABC study also showed that both sales and profits margins were on the upside for responding construction companies in December, with roughly 30% of those firms saying they expected their profit margins to increase in the near future; up from less than 25% who said that in November.

“Thee baseline expectation is that by the spring, the U.S. economy will blossom,” Anirban Basu, chief economist with the ABC, said in a statement.

“With many households sitting on mounds of savings and sustaining pent-up demand for many goods and services, the U.S. economy is set for rapid growth as it reopens more fully during mid to late 2021,” continued Basu.

While Basu cautioned that a resurging economy may not happen overnight, projects that were earlier cancelled due to the pandemic and economic shutdown, “are likely to come back to life over the next several months.”
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Although the latest project backlog numbers in the infrastructure and commercial and institution sectors have increased, they are still substantially lower than where those sectors stood in December of 2019, three months before the Covid-19 outbreak.

​By Garry Boulard

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