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Midwest Construction Backlogs Hit 18-Month High

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Midwest construction backlogs hit their highest mark since December 2012 in the second quarter, rising from 6.16 months to 6.42 months in quarter-to-quarter comparisons, according to data compiled by Washington, D.C.-based Associated Builders and Contractors. Though the region still trails the Northeast, South and West by up to three months, ABC anticipates greater activity in the energy and industrial sectors will propel Midwest backlogs higher.

After tumbling earlier this year, the probable result of harsh winter weather, the nation's backlogs rebounded to an all-time high between first and second quarters. Backlogs rose 5.4%, to 8.5 months.

“The long-awaited brisk non-residential construction recovery may be upon us,” says ABC Chief Economist Anirban Basu. “Industry momentum was snuffed out by a seemingly endless winter, but the pace of recovery has been accelerating ever since. Backlog gains were nearly ubiquitous during the second quarter, with gains registered in every industry segment, in nearly all geographies and for firms of virtually all sizes.” 

By region, backlogs are highest in the East (9.36 months), followed by the West (9.22 months) and the South (8.88 months).

“Further increases in construction backlogs are likely, given remarkably accommodative Federal Reserve policy even after five completed years of economic expansion, accelerated job growth and rising consumer confidence,” says Basu. “The nation has added roughly 2.5 million jobs over the past year, consistent with growing demand for space. Financing conditions also have improved, which should set the stage for more rapid non-residential recovery in a number of key construction segments, including offices and manufacturing.”

Backlogs for the commercial sector stand at 8.9 months, up from 8.44 months in the first quarter. Heavy industrial backlogs are 6 months, up nearly a month over the same period.

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