Construction backlogs bounced back in August, rising to 8.5 months from July’s reading of 8.0. This is according to the Associated Builders and Contractors’ (ABC) monthly Construction Backlog Indicator. The data is pulled from an ABC member survey conducted Aug. 20 to Sept. 4. The reading is unchanged on a year-ago basis.
ABC officials say that only the largest contractors experienced a decline in backlog in August. On a year-over-year basis, backlog gains are concentrated among the smallest contractors (those with less than $30 million in annual revenues).
“Backlog rebounded from July’s cyclical low but remains below the prevailing level from the last several months,” says ABC chief economist Anirban Basu. “Data centers continue to keep contractors busy even as activity softens in other segments. Although the backlog gap between contractors with and without data center work narrowed in August (9.9 versus 8.3 months, respectively), that appears to reflect more contractors securing work in the data center segment rather than a broader structural trend. Roughly one in six ABC members is currently under contract to work on a data center, the highest proportion on record.”
Basu adds that 12.3% plan to cut staffing levels over the next six months, the most in any month since December.”
“At the same time, there was a sharp increase in the number of contractors who, unprompted, mentioned labor shortages in the survey,” says Basu. “With construction job openings at a near two-year high, it appears that labor scarcity is reemerging as a major headwind for the industry.”