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Dive brief:
- The construction backlog jumped out at him highest level in almost three years in May, according to Associated Builders and Contractors. Work on books rose to 9.1 months, up 0.3 months from April.
- However, the strong backlog reading came at the same time as contractor confidence eased, according to the ABC’s construction confidence index.
- The difference indicates the role of data center construction in the industry’s pipeline, said Anirban Basu, ABC’s chief economist. Companies working on these projects report about three months more behind schedule than contractors without data center work.
Diving knowledge:
The backlog went up to her strongest level since 2023 driven largely by massive data center construction projects. According to ABC, contractors working on data center projects reported 11.6 months of delays in May, compared to 8.6 months for companies without such contracts.
“The backlog rose to a nearly three-year high in May,” Basu said. “This increase largely reflects the massive investments in data centers taking place across the country.”
But other measures show signs of strain for most contractors. ABC readings for sales, profit margins and staffing levels fell in May.
Notably, this is the first time this year that all three confidence measures fell in the same month, according to ABC.
“The way this boom is disproportionately benefiting larger contractors helps explain why contractor confidence fell in May even as the backlog continued to increase,” Basu said.
