Dive Brief:
- Construction backlog fell to 8.4 months in May due to tariff-related project delays and cancellations as it came off a two-year high, according to an Associated Builders and Contractors survey released June 10.
- Heavy industrial work posted a notable gain and the Northeast led with year-over-year growth, but overall momentum slowed as infrastructure, commercial and institutional work decelerated.
- “The impacts of tariffs are increasingly apparent, with nearly one in four ABC member contractors reporting tariff-related project cancellations in May,” said Anirban Basu, ABC chief economist.
Dive Insight:
The May decline in backlog arrives as contractors brace for tariff-related delays to accelerate in the months ahead, said Basu.
About 87% of contractors have now received notices of tariff-related materials price increases, according to ABC’s survey. Sales and staffing confidence also slipped in May.
Nevertheless, confidence in profit margins improved despite the pressure, according to the survey. The jump, however, may be temporary, said Basu.
“Of course, this survey was largely conducted prior to the announcement of the now-implemented 50% steel and aluminum tariffs,” said Basu. “Margins will likely come under pressure in the coming months.”
President Donald Trump increased steel and aluminum tariffs from 25% to 50% earlier in June. The move will inflate project budgets across a range of commercial building projects, according to a recent construction industry webinar.
Contractors remain broadly optimistic, according to the survey. The report found around six in 10 contractors expect their sales to rise over the next two quarters.
That suggests builders are still seeing momentum into the second half of the year, even as economic headwinds compound, added Basu.
