ABC's Receding CBI shows recession-mired construction industry.
Press Release Summary:
Associated Builders and Contractors (ABC) reported its Construction Backlog Indicator (CBI) - used as forward-looking indicator that measures amount of construction work under contract to be completed in future - declined 9% between November 2009 and January 2010. It slipped 16.3% during past year and currently stands at 5.5 months. ABC Chief Economist Anirban Basu says this indicates nonresidential construction industry is still stuck in its own recession.
Original Press Release:
Construction Backlog Indicator (CBI) Down 9 Percent in January
WASHINGTON, D.C. - Associated Builders and Contractors (ABC) today reports that its Construction Backlog Indicator (CBI) sharply declined by 9 percent between November 2009 and January 2010. CBI has slipped 16.3 percent during the last year and currently stands at 5.5 months, the lowest point reported in the 15 months ABC has gathered data. 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 now at its lowest point since ABC began measuring the statistic in November 2008 indicates that the nation's nonresidential construction industry remains mired in its own recession," said ABC Chief Economist Anirban Basu.
"Nonresidential construction tends to lag the overall economy by 12 to 24 months. With the broader economy having been in a slow recovery for roughly three quarters, and with the stimulus package still having an impact, the hope had been that some signs of backlog stability would be apparent by now. However, all indications continue to point toward an ongoing decline in the commercial and industrial construction industry," Basu said.
Regional Highlights
CBI Map of Regions, January 2009 v. January 2010
Regional Analysis
"While most regions experienced a decline in average backlog during the latest two-month period, with the exception of the Middle States, the pace of decline was quite modest. Overall, the data are consistent with the notion that while the pace of decline continues to slow, the downward trend is evident in virtually every region of the nation."
Industry Highlights
Industry Analysis
"The data indicate that infrastructure-related work, attributable to the stimulus package passed in February 2009, is no longer generating substantial new backlog now that the funds have largely been obligated to current projects under way. The elevated backlog readings of previous months are associated with substantial levels of ongoing construction, but the decline in backlog signals an eventual downturn in infrastructure-related construction spending."
Highlights by Company Size
Company Size Analysis
"Average backlog is now at its lowest level in both the $50 million to $75 million and the $75 million to $100 million categories. Many of these firms appear to be general contractors that continue to be underbid by larger firms with greater resources and greater capacity to undertake projects with little or no profit margin built into their bids. Larger firms also may be more likely to maintain productive banking relationships, allowing them to more nimbly access available contractual opportunities."
Associated Builders and Contractors (ABC) is a national association with 77 chapters representing 25,000 merit shop construction and construction-related firms with two million employees. Visit us at www.abc.org.
