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ABC: Construction backlog declines in Q2

The amount of pent-up work that construction companies have under contract “fell back to earth” in the second quarter of the year, the Associated Builders and Contractors reported on Wednesday.

The ABC, a national group that mostly represents nonunion contractors, found that contractors’ average amount of backlog work fell to 8.6 months in the second quarter. That was down by 4.1 percent from the first quarter and by 0.1 months from the second quarter of 2016.

Anirban Basu, ABC chief economist, said the decline was bound to happen.

““The first quarter of 2017 saw growing backlog for each and every region, industry and company size, which had never occurred in the eight-year history of the series,” he said in an official statement. “It should not be viewed as a surprise that backlog shortened modestly in the second quarter.”

In the so-called Middle States –a  group that includes Wisconsin – the backlog measurement decreased by only 0.62 months from the first quarter of the year. The ABC said that strong commodity prices helped prevent the decline from being steeper.

Among different sectors within the construction industry, the ABC found that backlog fell 5.8 percent for commercial and industrial projects and 6.4 percent afor heavy industrial projects. The ABC said the decrease was driven in part by slowing automobile sales and downward pressure on the price of manufactured goods.

Still, Basu said the decline is no reason for dismay about the industry’s prospects.

“With interest rates remaining low, U.S. and global economies improving and plentiful capital available, private construction activity should remain formidable,” he said. “However, public construction continues to languish, which has placed a ceiling on backlog throughout the current cycle.”

About Dan Shaw, dan.shaw@dailyreporter.com

Dan Shaw is the associate editor at The Daily Reporter. He can be reached at dan.shaw@dailyreporter.com or at 414-225-1807.

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