Dive Brief:
- Construction backlog rebounded month over month in August to 8.5 months following a cyclical low in July, according to a Tuesday release from the Associated Builders and Contractors.
- Despite the bounce, the total backlog still remains below the level from the last several months, said Anirban Basu, ABC chief economist.
- “Data centers continue to keep contractors busy even as activity softens in other segments,” said Basu in the release. “Roughly 1 in 6 ABC members is currently under contract to work on a data center, the highest proportion on record.”
Dive Insight:
More firms won data center work in August, closing the gap between contractors with and without awards in the segment, said Basu.
Firms with data center contracts report about 9.9 months of backlog, compared to 8.3 months for firms on the sidelines of the boom. Only the largest contractors, those with revenues greater than $100 million, experienced a decline in backlog in August, according to the report. But that drop was slight at 0.2 months.
As more firms win a slice of the data center pie, labor concerns are beginning to creep up again.
“There was a sharp increase in the number of contractors who, unprompted, mentioned labor shortages in the survey,” said Basu in the release. “With construction job openings at a near two-year high, it appears that labor scarcity is reemerging as a major headwind for the industry.”
At the same time, the share of contractors that intend to cut staffing levels over the next six months increased to 12.3% in August, added Basu. The percentage marks the highest level in any month since December 2025.
Firms without data center awards are slashing headcounts, said Zack Fritz, ABC economist.
“This is most likely a reflection of the ‘haves and have nots’ dynamics of data centers,” said Fritz. “Those with data center work are struggling to find specialty trade contractors, while other contractors are facing continually softening demand.”
Despite the dip in staffing level prospects, readings on sales and profit margins increased in August, according to ABC. All three components also indicate growth expectations over the next six months.
