An industry monitor report by Associated Builders and Contractors (ABC) showed that construction backlog among the largest contractors in the US has breached the 12-month level, indicating that the market has stabilized.
ABC’s Construction Backlog Indicator (CBI) revealed that backlog levels grew nearly 3% in the first quarter of 2016 year on year.
The report further said that a skilled worker shortage continues to challenge the sector.
“Contractors are no longer becoming busier; rather, the level of activity has stabilized at a reasonably high level,” ABC chief economist Anirban Basu observed. “Most contractors continue to express satisfaction regarding the amount of work they have under contract, he added.
“Subcontractors are much busier than they were several years ago, with general contractors reporting greater difficulty securing experienced contractors. Some construction firms are turning away work for the first time in years. “
Analysts also noted that the recent equilibrium may be due as much to supply constraints as static demand.
Basu however cautioned that there is a caveat to the situation: “That said, there are indications that certain commercial real estate segments are nearing the end of their development cycle. Developers, bankers and regulators have become generally more concerned by the possibility of overbuilding in hotel, office and retail markets. Many developers indicate that the current cycle is much closer to its end than to its beginning. The implication is that for the first time in years, backlog may be poised to decline after recovering massively since early 2010.”
