Dive Brief:
- Construction backlog increased for the second consecutive month in September, though contractors are starting to have second thoughts about future sales and profit margins, according to a Tuesday release from the Associated Builders and Contractors.
- Total backlog jumped month over month to 8.7 months, up 0.2 months from August and a year earlier, according to the survey conducted Sept. 21 to Oct. 5.
- Still, other pressures have emerged. “More than 1 in 4 contractors expect their profit margins to contract over the next six months, the highest share since November 2025,” said Anirban Basu, chief economist at ABC. “Those same cost pressures have suppressed sales expectations, which also fell to an 11-month low in September.”
Dive Insight:
Data center work continued to drive total backlog jumps, though the awards disproportionately benefitted the largest contractors, said Basu in the release.
About four in ten contractors with greater than $100 million in annual revenues have data center work right now, according to ABC. For contractors with fewer than $100 million in annual revenues, the share of those with data center work drops to 10%.
Moreover, the 15% of ABC members under contract for data center projects reported 11.3 months of backlog in September, a full three months stronger than contractors without such work, said Basu.
At the same time, commercial and institutional backlog, which tumbled in the middle of 2026, bounced back to the highest level since July 2025. Heavy industrial backlog, however, fell to its lowest level since March, according to the report.
The results show the gulf between construction's winners and losers is growing wider. At the same time, rising construction costs are creating headwinds for builders across the sector, said Basu.
“Rising materials and labor and borrowing costs continue to put pressure on contractors,” Basu said.
