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Dive Brief:
- The construction backlog was reduced to 8.4 months in October, down 0.1 months from September, according to a survey of Associated Builders and Contractors conducted from October 20 to November 4.
- Companies with $30-$100 million in revenue added to their pipelines. But at the extremes, for companies with revenues below $30 million or above $100 million, builders saw an overall decline in portfolios, the report said.
- Contractor confidence dipped as more firms signaled cooling activity ahead. Still, all three confidence metrics — sales expectations, profit margins and headcount — remained above 50, indicating expectations for growth over the next six months, according to ABC.
Diving knowledge:
The data highlights the difference between contractors with work linked to growth sectors and those exposed to softer areas of the construction industry.
For example, nearly 65% of contractors believe construction activity is contracting, said Anirban Basu, ABC’s chief economist. That outlook is in line with October’s lowest reading since May. At the same time, 23% of companies expect sales to decline in the next six months, the largest share in more than a year.
The pullback comes from smaller companies that do not primarily operate in any one sector, where pipelines were largely reduced in Octoberaccording to the report. The backlog for these smaller construction companies is just 5.8 months, according to ABC.
However, for larger contractors, work related to multimillion megaprojects continues to anchor overall volume.
“These findings are consistent with an industry sustained by still high manufacturing construction and a growing data center sector,” Basu said in the statement.
About one in seven contractors has data center contracts, Basu said. Those companies report 10.9 months of backlog compared to 8 months for companies without such work, he said.
Recent examples highlighting significant demand include Vantage Data Centers, a Denver-based hyperscaler. The company will invest $2 billion to build one three building data center campus in Stafford County, Virginia, according to an announcement by Virginia Governor Glenn Youngkin. Outside of Milwaukee, Vantage, along with tech companies OpenAI and Oracle also plan to develop one $15 billion campus in Port Washington, Wisconsinas part of the ongoing Stargate partnership.
