In a sign that work project plans continue to rise almost everywhere in the country, the Associated Builders and Contractors has released a new report showing that its backlog indicator is now up to 8.6 months.
That number is up only marginally over November’s 8.5 months but showed particular regional disparities with the South registering a backlog reading of 10.7 months over November’s 9.8 months.
Smaller increases were recorded in Midwest, going from 8.0 months to 8.5 months, with the somewhat depressed Northeast market staying the same from November to December at 8 months.
Only in the West was a decline recorded, with a work backlog going from 7.4 months in November to 6.6 months last month.
Conversely, looking at the trendline between December of 2022 and this past December, only the Midwest saw a backlog increase, with the other three regions off by a combined average of 2.3 months.
“Contractors experienced an uptick in optimism during the holiday season,” remarked Anirban Basu, chief economist with the Washington-based Associated Builders and Contractors, in a statement.
The group’s survey also showed a backlog increase for commercial and institutional work from 8.6 months to 9.1 months, while the heavy industrial backlog shortened from 8.8 months to 8.4 months.
Only in the infrastructure segment did things remain static: with November and December both showing a 7.9-month backlog.
As with previous readings, the size of the firm surveyed mattered: companies with revenues of less than $30 million recorded a 7.4-month backlog, followed by an 11.1-month backlog for companies with revenues topping out at $50 million.
The largest backlog was seen with firms in the $50 million to $100 million range at 10.7 months.
Noting that the Federal Reserve has recently indicated that it will move in the coming months to reduce borrowing costs, Basu remarked that lowered rates may soon free up financing capital.
And that, he added, will likely translate into improved backlog statistics, as well as “more optimism regarding sales, employment, and profit margins for the first half of 2024.”
By Garry Boulard
