Despite a cooling private construction market, contractor pipelines are holding firm thanks to surging demand in public infrastructure and digital facilities, according to the latest Associated Builders and Contractors (ABC) backlog report.
ABC’s survey — conducted Sept. 22 to Oct. 6 — found that the average construction backlog remained unchanged at 8.5 months in September, matching August levels. However, the composition of that backlog is shifting.
Over the past year, infrastructure-related work has been the only sector to significantly expand contractor pipelines, while commercial and institutional projects have tapered off amid financing challenges and waning private investment.
Contractor sentiment told a mixed story. ABC reported improving profit margin and staffing expectations, but declining sales outlooks, indicating that firms are confident about execution but uncertain about new deal flow.
ABC Chief Economist Anirban Basu said the resilience is largely due to two strong forces holding up the industry.
“Falling industrywide employment, a dearth of job openings and ongoing decreases in construction spending have not diminished ABC contractor member backlog or confidence,” said Basu. “This stability primarily stems from two sources.”
First, federal, state and local agencies continue to push forward with transportation, utilities and public facility upgrades backed by Infrastructure Investment and Jobs Act (IIJA) and other federal programs. That funding has insulated many contractors from private market volatility.
However, there’s a new risk on the horizon. The federal government shutdown, which began Oct. 1 and overlapped with the survey period, could cause disruptions to projects that rely entirely on federal appropriations. ABC reported that infrastructure backlog dipped by 1.7 months compared to the previous report, though it still sits 1.6 months higher than this time last year, suggesting long-term confidence remains strong.
The second major growth driver is the explosion of data center construction, powered by cloud expansion, AI adoption and edge computing.
“Approximately 1 in 5 contractors was under contract to work on a data center project in September,” said Basu. “While that’s a slightly lower share than in August, contractors that have data center work had significantly higher backlog than those who did not.”
According to the report, data center specialists are reporting close to 12 months of backlog, substantially higher than the 8-month average among contractors without digital infrastructure contracts. Industry analysts say hyperscalers like Amazon Web Services, Microsoft, Meta and Google are driving a record wave of large-scale server campus development, often taxing local utility grids and triggering fast-tracked permitting in emerging tech hubs like Ohio, Virginia, Texas and Arizona.
Originally reported by Sebastian Obando in Construction Dive
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