The South continues to outpace the rest of the nation in construction backlog length, underscoring the region’s robust economic momentum, according to the latest data from Associated Builders and Contractors (ABC).

“Backlog is longer in the South because contractors are busier,” ABC economist Zack Fritz told The Center Square. “This trend is downstream of the South's economic outperformance – rapid population growth has fueled a healthy labor market and significant development activity.”

In July 2025, the South’s Construction Backlog Indicator measured 9.8 months, unchanged from July 2024 but still a commanding 2.13 months ahead of the national average and the highest among all U.S. regions. The backlog metric represents the average period contractors are booked in advance, reflecting the depth of work in the pipeline.

While this extended backlog signals strong demand, ABC’s survey revealed a cautionary note—contractor confidence in both sales and profit margins slipped in July.

“Fewer than 2% of ABC members expect their profit margins to increase significantly over the next six months, the fewest since October 2024,” said Anirban Basu, ABC’s chief economist. “This is likely due to trade policy and the recent acceleration in materials price escalation; more than 80% of ABC members have been notified of tariff-related price increases.”

Basu added that a significant portion of the current workload is tied to major infrastructure initiatives and a nationwide boom in data center construction, observing that “1 in every 8 ABC members is currently under contract to perform work on a data center project.”

ABC measures backlog by calculating the ratio of contractors’ total work under contract to their prior year revenues. While some firms report no backlog, Fritz noted that the reading will “realistically always be positive” when averaged across the industry.

Migration patterns since 2020 have been a major driver of the South’s economic expansion. States such as Texas, Florida, North Carolina, Georgia, and South Carolina collectively added nearly 1.2 million residents, with the South as a whole being the only U.S. region to record net inbound domestic migration.

However, not all Southern states have shared equally in the population surge. Louisiana and Mississippi posted modest population declines over the same period.

ABC’s definition of the South encompasses Alabama, Arkansas, Florida, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Georgia, Tennessee, Texas, and Virginia. The region’s construction demand is bolstered by a mix of residential development, commercial growth, manufacturing projects, and public infrastructure spending—trends that analysts expect to keep the South’s backlog elevated well into 2026.

Originally reported by Nolan Mckendry in The Center Square.