Construction Backlog Sinks to January Low as Data Centers Mask Weakness

Construction Backlog Sinks to January Low as Data Centers Mask Weakness

Construction backlog dropped sharply in July to its lowest level since January, Construction Dive reports, citing a new Associated Builders and Contractors release showing contractors held just eight months of work on average.

Market Impact

That figure marks a 0.8-month decline from both June and July of last year, according to the ABC data. Anirban Basu, ABC’s chief economist, said the data center boom is masking broader softness across the industry. “There is a lack of momentum in any other segment,” Basu said in the release.

The divide is stark. The 12% of ABC contractors with data center projects under contract reported 11.4 months of backlog in July, while the other 88% without data center work reported just 7.5 months, per ABC. Company size also matters: firms with more than $100 million in annual revenue held 12.1 months of backlog, compared to seven months for contractors under $30 million in revenue. Basu singled out the $30-$50 million annual revenue category, where backlog fell to its lowest level since March 2020. Infrastructure backlog posted the steepest sector decline, down 1.3 months to 8.8 months, while commercial and institutional backlog slipped 0.9 months over the same period.

What It Means for Subcontractors

• Sub-tier contractors without data center exposure should temper Q4 pipeline assumptions. Non-data-center backlog sits at 7.5 months versus 11.4 months for firms with data center contracts, per ABC’s July release.
• Firms in the $30-$50 million annual revenue range face the tightest conditions since March 2020. Civil, electrical, and mechanical subs in this bracket should prioritize bid volume and shorten decision timelines on marginal jobs.
• Infrastructure-focused subcontractors, including civil and heavy highway trades, should watch for slower award pacing given the sector’s 1.3-month backlog drop, the largest decline among all segments tracked by ABC in July.
• Smaller firms under $30 million in revenue reported seven months of backlog against 12.1 months for firms over $100 million. Sub-tier operators bidding against larger GCs should expect tighter competition for remaining commercial and institutional work as bigger firms sit on deeper reserves.