Associated Builders and Contractors’ Construction Backlog Indicator increased 10 percent during the second quarter of 2011 to an average of 8.1 months, up from 7.3 months the previous quarter. The West experienced a modest construction backlog increase of .61 months from one year ago, rising from 7.33 to 7.94.

The CBI, which  is a forward-looking indicator that measures the amount of construction work under contract to be completed in the future, is 12 percent higher than a year ago.
“While the increase in construction backlog appears to be good news at first glance, taking a broader look reveals that the rise in the nation’s construction activity may be a reflection of the economic momentum that existed several months ago, but is now beginning to weaken,” said ABC Chief Economist Anirban Basu. “The nation’s economic recovery has remained fragile since June 2009 and any observed recovery in construction volumes has been tentative. The events of the last few weeks have had a negative impact on both the overall economy and the nation’s construction sector, with business leaders generally seeking to reduce exposure to risk and investment volatility.”

Basu said the U.S. economy continues to be pummeled by rising gas and food prices, federal lawmakers’ stalemate on lowering the nation’s deficit, the downgrade of the U.S. credit rating, Europe’s growing financial crisis and the U.S. financial market turmoil.

“None of this is good news for construction contractors or others hoping for a far ranging, more aggressive economic rebound,” Basu said. “Though average construction backlog has been on the ascent in recent months, future surveys are likely to reflect a reversal of the trend and may lead to a chill in the nation’s building recovery.”