U.S. construction activity showed renewed momentum in March as contractor backlogs expanded, signaling resilience across key sectors despite ongoing global economic uncertainty.
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According to new data from the Associated Builders and Contractors (ABC), construction backlog rose to 8.6 months in March, an increase of 0.5 months from February and a slight uptick year over year. The rebound follows a four-year low recorded in January, indicating a steady recovery in contractor workloads.
Industry analysts point to strong demand in specific segments, particularly data centers, as a major driver of growth. Contractors involved in data center projects significantly outperformed their peers, maintaining an average backlog of 10.6 months compared to 8.3 months for firms without such work.
The surge in backlog highlights the growing importance of digital infrastructure in the construction sector. As demand for cloud computing, artificial intelligence and data storage expands, developers continue to invest heavily in data center projects, providing a stable pipeline of work for contractors.
“Backlog has fully rebounded from January’s four-year low and, at 8.6 months, is now back to levels not seen since last summer,” said Anirban Basu. “Contractors appear unphased by the sharp rise in oil prices precipitated by the conflict in Iran.”
Beyond data centers, infrastructure construction also posted notable gains, adding 1.2 months to backlog during March. Commercial and institutional construction followed with a 0.5-month increase. However, the heavy industrial segment experienced a decline, reflecting uneven growth across the industry.
Despite the positive momentum, industry leaders remain cautious about future performance. Ongoing geopolitical tensions and their impact on energy markets could still influence construction costs and financing conditions.
“Future performance and contractor confidence around it depends on how quickly the conflict in Iran resolves,” Basu said. “A lengthy dispute will put continued upward pressure on oil prices and borrowing costs.”
Encouragingly, contractor sentiment appears to be improving in other areas. Profit margin expectations reached their highest level since February 2025, while staffing expectations continued to climb for the fourth consecutive month.
“Staffing expectations, up in each of the past four months, are now at the highest level since April 2022,” Basu added. “This increase is particularly surprising given that the industry’s hiring rate fell to the lowest level ever recorded in February, although it aligns neatly with the uptick in employment growth observed in the March jobs report.”
The latest data suggests that while macroeconomic pressures persist, contractors are finding stability through diversified project pipelines and sustained demand in high-growth sectors.
Originally reported by Sebastian Obando, Reporter in Construction Dive.
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