This audio is automatically generated. Please let us know if you have any comments.
Dive brief:
- The construction portfolio recovered month-on-month in August to 8.5 months after a cyclical low in July, according to a statement Tuesday from the Associated Builders and Contractors.
- Despite the rebound, the total portfolio still remains below the level of recent months, said Anirban Basu, chief economist at ABC.
- “Data centers continue to keep contractors busy even as activity softens in other segments,” Basu said in the statement. “Approximately 1 in 6 members of the ABC are currently under contract to work in a data centre, the highest proportion on record.”
Diving knowledge:
More companies won data center work in August, closing the gap between contractors with and without awards in the segment, Basu said.
Companies with data center contracts report about 9.9 months of lag, compared to 8.3 months for companies on the fringes of the boom. According to the report, only the largest contractors, those with more than $100 million in revenue, experienced a decline in the backlog of work in August. But this drop was slight at 0.2 months.
As more companies gain a piece of the data center pie, work concerns they start to rise again.
“There was a sharp increase in the number of contractors who, unprompted, mentioned labor shortages in the survey,” Basu said in the statement. “With construction job offers at a nearly two-year high, labor shortages appear to be re-emerging as a major headwind for the industry.”
At the same time, the share of contractors intending to cut staffing levels over the next six months rose to 12.3% in August, Basu added. The percentage marks the highest level in any month since December 2025.
Companies without data center awards are downsizing, said ABC economist Zack Fritz.
“This is likely a reflection of the ‘haves and have-nots’ data center dynamic,” Fritz said. “Those who work in the data center are struggling to find specialty contractors, while other contractors face continued soft demand.”
Despite the drop in the outlook for staffing levels, readings on sales and profit margins rose in August, according to ABC. All three components also indicate growth expectations for the next six months.
