Dive Brief:
- Construction backlog dipped to 8.4 months in October, down 0.1 months from September, according to an Associated Builders and Contractors survey conducted Oct. 20 to Nov. 4.
- Firms with $30 million to $100 million in revenues added to their pipelines. But at the extremes, for companies with revenue below $30 million or above $100 million, builders posted overall backlog declines, according to the report.
- Contractor confidence slid as more firms signaled cooling activity ahead. Still, all three confidence metrics — expectations for sales, profit margins and staffing — stayed above 50, which indicates growth expectations over the next six months, according to ABC.
Dive Insight:
The data spotlights the difference between contractors with work tied to growth sectors and those exposed to softer areas of the construction industry.
For example, nearly 65% of contractors think construction activity is contracting, said Anirban Basu, ABC chief economist. That outlook aligns with October’s lowest backlog reading since May. At the same time, 23% of firms expect sales to decline in the next six months, the largest share in more than a year.
The pullback stems from smaller firms that do not primarily operate in any one industry, where pipelines largely thinned in October, according to the report. Backlog for these smaller construction companies stands at just 5.8 months, according to ABC.
However, for larger contractors, work related to multibillion-dollar megaprojects continues to anchor overall volume.
“These findings are consistent with an industry that is sustained by still-elevated manufacturing construction and a surging data center sector,” Basu said in the release.
Roughly one in seven contractors hold data center contracts, said Basu. Those firms report 10.9 months of backlog compared to 8 months for firms without that work, he said.
Recent examples highlighting that major demand include Vantage Data Centers, a Denver-based hyperscaler. The firm will invest $2 billion to build a three-building data center campus in Stafford County, Virginia, according to an announcement from Virginia Gov. Glenn Youngkin. Outside Milwaukee, Vantage, along with tech companies OpenAI and Oracle also plan to develop a $15 billion campus in Port Washington, Wisconsin, as part of the ongoing Stargate partnership.
