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Midwest lags other regions in ‘construction backlog’

The backlog of construction projects now in the works decreased slightly in the fourth quarter of last year, a prominent trades group said on Tuesday.

The Associated Builders and Contractors reported that its construction backlog indicator was at 8.9 months in the fourth quarter, a figure down 1.1 percent from the third quarter and 7.5 percent from the same period a year ago. The construction backlog indicator measures demand for construction services by recording how many months of work contractors have “on their books.”

Anirban Basu, ABC chief economist, said that even though the backlog indicator dipped in recent months, it remains close to a historic high. The average backlog for all four quarters last year was 9.1 months.

“A number of factors contributed to the decline, including a surge in materials prices in early 2018, which likely hindered project planning and contract negotiations later in the year,” Basu said. “Interest rates also rose during much of the year, potentially resulting in some projects being postponed or canceled. It is also likely that the feverish market volatility during the fourth quarter of 2018 caused some investors to hold off until the financial marketplace stabilized, which it recently did.”

Contractors in the so-called Middle States – a group that includes Wisconsin – had a backlog of 7.14 months. That was the lowest figure for any region of the country and was down by 8.1 percent from the third quarter. The ABC suggested the decline might have been a result partly of poor performance in the automotive industry.

Among individual construction sectors, the biggest backlog in the fourth quarters was seen for infrastructure projects (9.53 months), followed by commercial/industrial projects (9.04 months) and heavy industrial projects (7.82 months).

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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