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Construction backlog increases in first quarter

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Data from a new Associated Builders and Contractors study shows possible improvements for the construction sector, as companies reported a first-quarter increase in backlog.

Nationally, construction companies carried a backlog of 6.07 months in the first quarter, up from 5.81 months in fourth-quarter 2009, according to ABC's Construction Backlog Indicator.

However, the Northeast is the only region of the country where backlog numbers in the first quarter were higher than the same period in 2009. The Midwest had an average backlog of 5.52 months, down from 5.7 months in first-quarter 2009.

"The fact that the CBI is on the rise illustrates that the improvements recently seen in various other indicators, including construction spending, will continue through much of the balance of 2010," ABC Chief Economist Anirban Basu said in a news release. "However, the overall impact of the recession may not be at an end or approaching an end. It remains too soon to tell whether the current momentum will continue through 2011."

He also noted that nonresidential construction tends to lag behind the overall economy by 12 to 24 months, meaning there is no guarantee that the recovery will be sustained.

Locally, the market seems to be mirroring the regional trend, according to Brent Beattie of Wildcat Materials, who also serves as president of Springfield Contractors Association. Beattie said the demand for his materials has been fairly steady - a likely sign of steady project demand.

"Things are running fairly smoothly, and there's more coming down the pipe than there was six to nine months ago," Beattie said. "The first quarter of this year compared to the first of last year was down, but compared to third or fourth quarter 2009, it's up."

Broken down by company size, the report shows backlog decreased for companies with less than $50 million in annual revenue, which Basu said indicates that larger companies continue to underbid smaller firms because of greater resources and the ability to bid projects with little to no profit margin.[[In-content Ad]]


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