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Midwest Logs Modest Gain in Backlogs During Second Quarter

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Average construction backlogs rebounded in the U.S. in the second quarter, with Midwest states logging a quarter-to-quarter increase of .39 months, according to newly released data from the Washington, D.C.-based Associated Builders and Contractors (ABC).

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However, the Midwest continues to lag other regions. While Midwest states registered an average backlog of 6.73 months in the second quarter, the figure fell short of the 8.75 months logged in the South, 7.50 months logged in the West and 7.28 months logged in the Northeast. Midwest backlogs also dropped .21 months from the same period a year ago.

The national picture proved brighter, with the construction backlog indicator (CBI) rising 4.3% after declining during the previous two quarters.

“The CBI accurately predicted both the broader economic softness experienced during the first half of 2012, as well as a flattening of the nation’s non-residential construction recovery,” says ABC Chief Economist Anirban Basu. “The latest CBI data is now projecting gradual acceleration in non-residential construction spending, and perhaps a slight increase in the overall pace of construction activity going forward.”

Infrastructure registered the largest quarter-to-quarter increase of any segment, up 1.4 months to more than 10 months—the first time infrastructure has exceeded 10 months since the second quarter of 2010.

At 5.92 months, backlogs in heavy industrial reached their highest levels since the first quarter of 2011, though they remain the lowest of all industry segments.

By comparison, backlogs in the commercial and institutional segment currently average 7.78 months.

Despite pent-up demand for power, manufacturing and infrastructure projects, “Any improvement in nonresidential construction activity is likely to remain modest given the ongoing uncertainty regarding America’s fiscal cliff – a number of tax increases and spending cuts that take effect at the end of the year – as well as European sovereign debt issues and increasingly volatile energy prices,” Basu says. “The level of economic and political uncertainty remains far too elevated to permit more aggressive nonresidential construction spending recovery in the near term.”

 

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