Associated Builders and Contractors reported Dec. 16 that its gauge of construction backlog fell to 8.1 months in November, the lowest level since February 2024, indicating increasing pressure on contractors’ pipelines heading into 2026.
The reading was down 0.3 months from October 2025 and was also down 0.3 months from a year earlier, according to a survey of ABC members conducted from Nov. 20 to Dec. 8.
The decline was broad-based across most company sizes and regions, with monthly and annual backlog declines for all contractor size categories except for companies with more than $100 million in annual revenue. Smaller contractors experienced the strongest pullback.
Businesses with less than $30 million in annual revenue reported a lag of 6.9 months in November, down 0.4 months from October and down 0.5 months from a year earlier, marking their lowest reading in more than four years.
At 8.1 months, the November backlog level suggests that contractors enter 2026 facing intensifying bidding competition and reduced pricing leverage, particularly for companies lacking access to data center infrastructure and labor.
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Historically, backlog readings in this range have coincided with more aggressive bidding, tighter contingencies, and greater sensitivity to material and labor cost changes.
By sector, infrastructure contractors continued to post the strongest backlog at 9.6 months, although this figure was down 0.2 months from October. The commercial and institutional portfolio declined to 8.3 months, while the heavy industrial portfolio saw the largest drop, falling to 7.1 months, down 1.7 months on the month.
Regionally, the backlog declined most strongly in the Middle States and the South. The North East was the only region to post a monthly increase, rising to 8.3 months, while the West was stable at 8.1 months, but remained below its level at the same time last year.
“The job backlog declined sharply in November and is now at its lowest level since February 2024,” ABC chief economist Anirban Basu said in a statement. “The decline was particularly sharp for smaller contractors; ABC members with less than $30 million in annual revenue posted their lowest reading in more than four years.”
Basu pointed to unequal access to high-growth markets as a key factor supporting the lag among larger firms.
Less than 6% of ABC members with less than $30 million in annual revenue reported being under contract for data center projects, compared to 37% of contractors with more than $100 million in annual revenue.
This disparity has become increasingly consequential as data centers and related electrical infrastructure remain among the most active construction segments nationally.
Despite backlog erosion, the outlook for near-term contractor activity remained expansive, albeit more cautious.
Construction employment rose in November, although the backlog eased, with non-residential jobs driving monthly gains while residential employment continued to contract, according to ABC and US Bureau of Labor Statistics data.
Chart courtesy of ABC
ABC’s construction confidence index showed sales expectations rose to 59.8 in November, while profit margin expectations fell to 51.1 and staffing expectations fell to 58.2. All three readings remained above 50, the threshold that indicates expectations for growth over the next six months.
The composition of these expectations, however, shifted towards stricter operating conditions. Only 33.6% of contractors expect profit margins to increase over the next two quarters, the lowest share in more than a year, while nearly 27% anticipate a margin decline.
This softening outlook comes as materials prices have started to rise after several quarters of relative stability, adding uncertainty to bid prices and cost recovery.
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“Despite the narrowing of the backlog, contractors remain broadly optimistic that their sales and staffing levels will expand over the next six months,” Basu said. “At the same time, only 33.6% of contractors expect their profit margins to expand over the next two quarters. This likely reflects growing anxiety about material costs.”
The ABC noted that the reference months for both the Construction Backlog Indicator and the Construction Confidence Index were revised to May 2020 to better reflect the timing of the survey.
The backlog indicator measures work under contract based on the most recent financial data available, while the confidence index measures contractors’ outlook for the next six months.
