Dive Brief:
- Construction backlog jumped to its highest level in nearly three years in May, according to Associated Builders and Contractors. Work on the books increased to 9.1 months, up 0.3 months from April.
- The strong backlog reading occurred, however, at the same time contractor confidence declined, according to ABC’s Construction Confidence Index.
- The difference indicates the role of data center construction in the industry’s pipeline, said Anirban Basu, ABC chief economist. Firms working on those projects report about three months more of backlog than contractors without data center work.
Dive Insight:
Backlog climbed to its strongest level since 2023 driven in large part by massive data center construction projects. Contractors working on data center projects reported 11.6 months of backlog in May, compared to 8.6 months for firms without those contracts, according to ABC.
“Backlog rose to a nearly three-year high in May,” said Basu. “This increase largely reflects the massive data center investments taking place across the nation.”
But other measures show signs of strain for the majority of contractors. ABC’s readings for sales, profits margins and staffing levels all fell in May.
Notably, that’s the first time this year all three confidence measures fell in the same month, according to ABC.
“The way this boom is disproportionately benefitting larger contractors helps to explain why contractor confidence slipped in May even as backlog continued to climb,” Basu said.
