January ABC Backlog Indicator Dips - Confidence in Sales and Hiring Holds

WASHINGTON, DC — Associated Builders and Contractors reported today that its Construction Backlog Indicator declined to 8.0 months in January, based on an ABC member survey conducted from Jan. 20 to Feb. 3. The January reading reflects a 0.2-month decrease from December and a 0.4-month drop compared to January 2025.

Backlog Trends Continue to Favor Larger Contractors

While overall backlog eased, performance remains uneven across contractor size. Backlog levels have increased over the past year for contractors with more than $50 million in annual revenue, underscoring continued demand for larger firms with the capacity to absorb complex or long-term projects. In contrast, contractors below the $50 million revenue threshold experienced a sharper decline in backlog, signaling increased competition and tighter project pipelines for smaller firms.

Contractor Confidence Improves Despite Backlog Dip

ABC’s Construction Confidence Index showed continued improvement in January, with readings for sales, profit margins and staffing levels all increasing from the prior month. Sales expectations are stronger than they were one year ago, reflecting optimism around near-term project activity.

Growth Expectations Remain Above Expansion Threshold

Although expectations for profit margins and staffing levels softened slightly compared to last year, all three confidence components remain above the 50-point threshold, indicating that contractors still anticipate growth over the next six months. The data suggests that while backlog conditions have tightened modestly, contractors remain cautiously optimistic about demand and workload heading into the spring construction season.

“Backlog fell to a four-year low in January, yet contractors remain shockingly sanguine about the near-term outlook,” said ABC Chief Economist Anirban Basu. “Just 13% of contractors expect their sales to decrease over the next six months, the smallest share since February 2022. Despite that personal confidence, ABC members are far less optimistic about their competition; 46% of contractors expect that other contractors will see their sales decline over the next two quarters. Whether or not this personal optimism is justified will likely depend on the extent to which borrowing costs can decline in 2026.”

Note: 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.