Contractor Backlog Rises to 8.7 Months in September as Data Centers Lead

October 13, 2026

ABC Economics chart of the Construction Backlog Indicator and Construction Confidence Index through September 2026 | Westside Construction Group

Contractor backlog rose for a second straight month in September, reaching 8.7 months, according to the Construction Backlog Indicator that Associated Builders and Contractors released on Tuesday, Oct. 13. Data center work continues to carry the number, while contractors' expectations for sales and profit margins weakened.

What Happened

ABC reported that its Construction Backlog Indicator reached 8.7 months in September, an increase of 0.2 months from August and also 0.2 months higher than in September 2025 (HPAC Engineering). The figures come from an ABC member survey conducted from Sept. 21 to Oct. 5 (TED Magazine).

The September reading continues a recovery from midsummer. Backlog fell to 8.0 months in July, as WCG reported in September, then rebounded to 8.5 months in August (WCG).

What Is Confirmed

Data centers drive the gain. About 15% of ABC members surveyed are under contract for data center work, and those firms averaged 11.3 months of backlog, roughly three months more than firms without data center work (HPAC Engineering).
Large firms hold most of that work. Thirty-nine percent of contractors with more than $100 million in annual revenue report data center work, compared with about 1 in 10 contractors below $100 million (TED Magazine).
Commercial and institutional backlog improved. Backlog in that segment rose to its highest level since July 2025 (HPAC Engineering).
Heavy industrial backlog slipped. It fell to its lowest level since March, though it remains 0.5 months higher than a year ago (TED Magazine).
Confidence is mixed. ABC's Construction Confidence Index reading for staffing rose, while the readings for sales and profit margins fell. Sales expectations dropped to an 11-month low, and more than 1 in 4 contractors expect margins to shrink over the next six months, the highest share since November 2025. All three components remain above 50, the threshold that signals expected growth (HPAC Engineering).

ABC Chief Economist Anirban Basu said, "Backlog increased for the second straight month in September as data center work continues to keep contractors busy" (TED Magazine). He added that "rising materials and labor and borrowing costs continue to put pressure on contractors" (TED Magazine).

The published coverage does not include regional backlog figures or the numeric index values for sales, margins and staffing, so those details are not confirmed here.

What It Means for Owners and Contractors

The headline number looks healthy, but the details show a market that is splitting. Firms with data center contracts are booked nearly a year out, while firms without that work average about three months less. For owners planning commercial, institutional or industrial projects, that gap affects who is available to bid. Large general contractors and the specialty trades they rely on, particularly electrical and mechanical subcontractors, may be committed to data center schedules, while mid-size firms may have more open capacity.

The confidence readings matter just as much. When more contractors expect margins to tighten because of materials, labor and borrowing costs, bids tend to carry more contingency, and contractors become more selective about risk allocation, escalation clauses and payment terms. Owners who lock in scope, budget and schedule early, and who address material escalation openly in contracts, are better positioned to get firm pricing.

The improvement in commercial and institutional backlog is a positive sign for building work outside the data center segment. The softer heavy industrial reading is worth watching for manufacturers and processors planning plant expansions, since it may point to more competitive bidding in that segment in the near term.

What to Watch

Whether October backlog continues to rise or levels off as data center demand matures.
Whether the sales and margin readings keep falling, which would point to tighter pricing in 2027 bids.
Upcoming federal construction spending and producer price data, which will show whether the cost pressures contractors describe are easing or building.

Image credit: ABC Economics. Image from the source article.