Contractors Report Cautious Outlook as Backlog Slides to 8.4 Months

WASHINGTON, DC — Associated Builders and Contractors (ABC) reports that its Construction Backlog Indicator fell slightly to 8.4 months in October, according to the latest member survey conducted from Oct. 20 to Nov. 4. The reading represents a 0.1-month drop from September but remains unchanged from October 2024, signaling stability year over year despite signs of growing caution among contractors.

Backlog Steady Across Core Sectors

Across the three primary industry categories tracked by ABC—commercial/institutional, heavy industrial, and infrastructure—backlog was flat or slightly higher compared with September. The biggest decline came from firms that do not specialize in a single market segment, typically smaller general contractors and trades, where backlog fell sharply to 5.8 months.

Confidence Indicators Weaken

ABC’s Construction Confidence Index readings for October showed unchanged expectations for sales, while profit margins and staffing levels slipped modestly. Even with those declines, all three measures remain above 50, the threshold indicating contractors still expect growth over the next six months.

“Nearly 65% of contractors indicated that they think the US construction industry is contracting, according to ABC’s October survey,” said Anirban Basu, ABC Chief Economist. “This dismal assessment accompanied the lowest backlog reading since May, and 23% of contractors expect their sales to decline over the next six months, the highest share in over a year.”

Basu added that while manufacturing and data center construction continue to support overall activity, the outlook remains uneven. “These findings are consistent with an industry that is sustained by still-elevated manufacturing construction and a surging data center sector,” he said. “Approximately one in seven contractors are under contract to work on data centers, and those contractors have significantly higher backlog—10.9 months compared to 8.0 months for those that are not.”

The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020, to better reflect the survey period. CBI quantifies the previous month's work under contract based on the latest financials available, while CCI measures contractors' outlook for the next six months.

Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings and the Producer Price Index.

Note: this release was rewritten with help from generative AI.