“Both the infrastructure and the heavy industrial categories experienced meaningful and significant increases in construction backlog during the second quarter,” said Basu. “From a macroeconomic perspective, there is significant demand for more competitive infrastructure and for American alternatives to foreign-manufactured goods. The re-shoring of production to the United States appears to be creating new opportunities for construction workers, particularly in the South.
“Progress in the commercial and institutional category may be a bit slower in the near future,” Basu said. “Spending continues to be hamstrung by a combination of weak investment returns and cautious financiers; however the CBI data indicates gradual increases in construction spending in this sector in the coming months.”
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Highlights by Company Size
- Construction backlog for the largest construction firms expanded during the second quarter to nearly 10 months. This includes firms with annual revenue in the $50 million to $100 million category and the $100 million or more category.
- Firms with annual revenues in the $30 million to $50 million category saw a slight decrease in construction backlog from the first quarter but remain above 9 months for a second consecutive quarter.
- Construction backlog among firms with less than $30 million in annual revenue was below 7 months for the second consecutive quarter.
“For several quarters, much of the improvement in backlog had been among smaller firms,” said Basu. “However, much of the expansion in the second quarter occurred among larger firms as a result of improved construction spending dynamics in the infrastructure and heavy industry categories.
“Smaller firms have tended to benefit disproportionately from improvements in commercial construction and construction related to lodging,” Basu said. “Consumer spending growth has become more erratic of late, implying that the pace of improvement in commercial construction and other forms of construction dependent upon consumer spending may not be as rapid going forward. Correspondingly, backlog among the smallest contractors, those with less than $30 million in annual revenue, has not improved significantly during recent quarters.”
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