So far 2011 has been a rollercoaster year for the Construction Industry as a whole. Most recently the industry saw a spending increase in June to hit a 6-month high, only to see the most recent economic data suggest a sizable decrease in spending in July. According to McGraw-Hill Construction, there was a 10% decrease in July construction starts compared to a 15% gain in June as revealed in their article. Contradictory to this, The Associated Builders and Contractors (ABC) released their Construction Backlog Indicator which appeared to present improved data in that backlog had increased 10% in the 2nd Quarter of 2011.
The ABC report goes on to caution that the backlog indicator is expected to decrease upon its next measurement provided recent down beat news about the U.S. economy, in addition to the recent decreases in construction spending. Both articles specifically point out fiscal conditions of federal, state, and local governments are a large contributing factor to the current decrease in spending and continued expected decrease.
As discussed in a previous article on this blog, the market will continue to be extremely tough for many contractors through at least the first half of 2012. Current economic data only reinforces these expectations.