Dive brief:
- The construction backlog was reduced to 8 months in January, it fell 0.2 months from December and is now at its lowest level in four years, according to a survey by the Associated Builders and Contractors from Jan. 20 to Feb. 3.
- However, reinforcing a recent theme in the industry, this decline was not felt equally by all builders. Larger contractors with more than $50 million in annual revenue saw year-over-year backlog gains, while those below that threshold had fewer jobs on their books compared to the same point in 2025.
- The infrastructure portfolio increased month-on-month in January to 10 months, almost a month’s gain from December. Other categories, including commercial and institutional, fell. Year-over-year, the total portfolio was down 0.4 months in January for the sector as a whole.
Diving knowledge:
However, the unfavorable report on the backlog to start the year was in stark contrast to contractors’ feelings about their own businesses, said Anirban Basu, ABC’s chief economist.
“The backlog fell to a four-year low in January, but contractors remain surprisingly bullish on the near-term outlook,” Basu said. “Only 13% of contractors expect their sales to decline over the next six months, the smallest share since February 2022.”
At the same time, despite the sunny outlook for their own businesses, ABC members seem much less optimistic about the positioning of their peers. According to the report, about 46% of contractors expect other contractors to see their sales decline over the next two quarters.
“Whether or not this personal optimism is justified will likely depend on how much borrowing costs can decline in 2026,” Basu said.
According to the report, ABC’s construction confidence index reading for sales, profit margins and personnel jumped to start 2026. Sales expectations, specifically, posted higher readings than a year ago. Profit margins and staffing levels also point to growth expectations for the next six months, but are slightly worse than a year ago.
