Construction backlog in July plunges to lowest level since January
According to a report released by the Associated Builders and Contractors (ABC) in July, construction backlog fell sharply month-over-month to its lowest level since January. Contractors' average backlog was 8 months, down 0.8 months from both June and the same period last year. ABC Chief Economist Anirban Basu noted that the data center boom masks weakness in other sectors, with small and mid-sized contractors facing particularly severe challenges.
Key Takeaways
- Construction backlog fell sharply in July, dropping tothe lowest level since January。
- Contractors reported an average of 8 months of work in hand in July, down 0.8 months from both June and the same period last year.
- "The data center boom masks the depth of this weakness, with no other sector showing growth momentum," said Anirban Basu, chief economist at ABC, in a press release.
In-Depth Analysis
ABC noted that the backlog report highlights the widening gap between contractors with data center projects and those without.
Basu said that among ABC's contractors, the 12% with data center contracts reported significantly higher July backlogs of 11.4 months, while the remaining 88% without such projects had backlogs of only 7.5 months.
"This dynamic is particularly challenging for small and mid-sized contractors. For example, contractors with annual revenues between $30 million and $50 million have seen their backlogs fall to the lowest level since March 2020," Basu said in the release.
The data also showed that large contractors continue to have significantly more work on hand than smaller firms. According to ABC, companies with annual revenues exceeding $100 million reported 12.1 months of backlog in July, compared to just 7 months for contractors with revenues below $30 million.
By sector, infrastructure backlog saw the largest month-over-month decline, falling 1.3 months to 8.8 months, while commercial and institutional project backlogs dropped 0.9 months over the same period.