Dive Brief:
- Construction backlog ticked up to 8.2 months in December, up 0.1 months from November, according to an Associated Builders and Contractors survey conducted Dec. 22 to Jan. 7.
- The divide between large and small firms continued to grow. Contractors with more than $100 million in annual revenue posted their highest backlogs since 2021, while those with less than $30 million recorded their lowest levels since 2021.
- Though contractor confidence improved by the end of the year, ABC highlighted that overall optimism decreased on a year-over-year basis, according to the report. For all contractors, overall backlog was 0.1 months lower than December 2024.
Dive Insight:
The widening gulf between large and small contractors traces back to one force, said Anirban Basu, ABC chief economist: the data center construction boom.
“Backlog fell sharply for smaller contractors during 2025,” Basu said in the report. “That decline was largely due to the fact that nonresidential construction momentum is confined to the data center segment, and those projects are far more beneficial for the largest contractors.”
The backlog divide will likely widen in 2026 as the data center boom shows no signs of a slowdown.
Contractors in the data center space expect more activity over the next 12 months, especially as hyperscalers continue to push billion-dollar facilities at pace. Vacancy rates are low in the sector, which indicates a lengthy runway for additional projects, said James Bohnaker, senior economist at Cushman & Wakefield, a Chicago-based commercial real estate services firm.
Though that’s excellent news for contractors with data center projects on their books, those who find their firms outside of the AI party are seeing their backlogs shrink.
In December, the 13% of ABC members under contract to work on a data center project had a significantly higher backlog than those who did not, said Basu. Data center-focused firms reported roughly 11 months of backlog, compared to 7.8 months for contractors without data center projects.
That split is keeping overall contractor confidence down. Though confidence ticked up in December, the level still “remains well below late-2024 and early-2025 levels,” said Basu.
