Midwest construction backlog falls 3% in 2Q

Construction backlog in the Midwest, which includes Missouri, dropped 3 percent to 6.73 months during the second quarter, according to the Associated Builders and Contractors' latest Construction Backlog Indicator released today.

The CBI is a forward-looking economic indicator measuring construction work that is under contract for completion. According to the ABC, the higher the backlog, the more comfortable contractors can be with their near-term financial picture. Lower backlogs indicate contractors are running out of work and could be struggling to secure additional sources of future revenue.

Contractors in the Midwest region reported the lowest backlog among ABC's four regions, falling behind the South (8.75 months), the West (7.5 months) and the Northeast (7.28 months), according to a news release.

The average U.S. backlog rose to 7.7 months during the second quarter, after declining during the previous two. However, the latest CBI is 0.4 months lower than in the second-quarter 2011 backlog of 8.1 months.

The latest CBI was led by the largest construction firms - those with annual revenues of $50 million to $100 million and those above $100 million - which increased backlog figures to nearly 10 months on average. For firms with less than $30 million in annual revenue, construction backlog was below 7 months for the second consecutive quarter, the release said.

“For several quarters, much of the improvement in backlog had been among smaller firms. 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," ABC Chief Economist Anirban Basu said in the release. Infrastructure segment backlog rose to more than 10 months, the first time it has done so since the second quarter of 2010. The heavy industrial category backlog increased to its highest level since first-quarter 2011 but was the lowest of all industry segments at 5.92 months.