U.S. construction backlog slipped again in November, underscoring a widening divide between large contractors tied to megaproject work and smaller firms grappling with softer market conditions.
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Construction backlog fell to 8.1 months in November, down 0.3 months from October, according to a new survey from Associated Builders and Contractors conducted between Nov. 20 and Dec. 8. The decline marks the lowest backlog level since February 2024 and reflects continued pressure on smaller contractors’ pipelines.
The drop was widespread across nearly all contractor sizes, with one notable exception: firms generating more than $100 million in annual revenue. Those larger companies were the only group to post both month-over-month and year-over-year backlog gains, according to the report.
By contrast, smaller contractors experienced the steepest pullback. Firms with less than $30 million in annual revenue recorded their weakest backlog readings in more than four years, highlighting the uneven distribution of available work across the industry.
Backlog weakness among smaller firms is closely tied to limited access to data center construction, one of the most resilient segments of the market, said Anirban Basu, ABC’s chief economist. Fewer than 6% of contractors in the smallest revenue tier reported holding data center projects, compared with 37% of firms earning more than $100 million annually.
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That imbalance has helped shield large contractors from the broader slowdown, even as backlog levels soften elsewhere.
Despite shrinking pipelines, contractor confidence sent mixed signals in November. Expectations for sales improved, while outlooks for profit margins and staffing levels weakened. Still, all three confidence measures remained above 50, indicating that contractors overall continue to expect growth over the next six months, according to ABC.
“Despite the decline in backlog, contractors remain broadly optimistic that their sales and staffing levels will expand over the next six months,” said Basu in the release. “At the same time, just 33.6% of contractors expect their profit margins to expand over the next two quarters, the lowest share in over a year.”
Concerns about profitability are being driven largely by rising material costs, Basu noted. After several quarters of relative price stability, costs for several key construction materials have begun to climb again, squeezing margins — particularly for smaller firms with less pricing power.
Taken together, the November data highlights a construction market increasingly defined by scale. While megaprojects and specialized work such as data centers continue to buoy large contractors, smaller builders are facing tighter pipelines, rising costs and growing pressure to adapt as 2026 approaches.
Originally reported by Sebastian Obando in Construction Dive.
