The Associated Builders and Contractors (ABC) released its Construction Backlog Indicator on November 11, 2025, reporting that contractor backlog fell to 8.4 months in October—the lowest reading since May 2025. According to ABC's member survey conducted October 20 through November 4, the backlog reading declined 0.1 months from September but remained unchanged compared to October 2024.
The latest ABC data reveals deteriorating contractor sentiment across the construction industry. Key findings include:
For construction firms nationwide, the October backlog decline signals a challenging market environment. With backlog declining and nearly two-thirds of contractors believing the industry is contracting, many firms face revenue pressures and may need to adjust staffing levels or pricing strategies. The gap between short-term contractor sentiment and medium-term growth expectations suggests uncertainty about the industry's direction.
Small contractors appear particularly vulnerable—respondents primarily operating outside a specific industry vertical (generally the smallest contractors) saw backlog fall sharply to just 5.8 months, well below the overall average. These generalist contractors may face more difficulty accessing specialized project opportunities.
One bright spot in the data: the surging data center construction sector continues to outperform broader industry trends. Approximately 1 in 7 contractors are under contract to work on data center projects, and those contractors reported significantly higher backlog of 10.9 months compared to 8.0 months for contractors not working on data centers.
This split performance suggests the construction industry is bifurcated—data center and manufacturing construction remain robust, while other sectors face headwinds from high interest rates, labor costs, and material prices.
ABC's survey found that backlog was flat or increased on a monthly basis in each of the three industries considered in the survey, suggesting some sectors are holding steady despite overall market weakness. However, the sharp drop among small, generalist contractors indicates that these modest gains are concentrated among firms with specialized expertise or sector focus.
ABC Chief Economist Anirban Basu offered a sobering analysis: "Nearly 65% of contractors indicated that they think the U.S. construction industry is contracting, according to ABC's October survey. This dismal assessment accompanied the lowest backlog reading since May, and 23% of contractors expect their sales to decline over the next six months, the highest share in over a year. These findings are consistent with an industry that is sustained by still-elevated manufacturing construction and a surging data center sector."
For owners considering construction projects, the current market environment presents opportunities and risks. Low backlog levels may mean faster project start times and potentially lower bid costs as contractors compete for work. However, the high percentage of contractors expecting sales declines suggests financial stress in the industry, which could impact contractor stability and project delivery quality.
The continued weakness in construction activity, reflected in declining backlog despite relatively stable confidence indices, indicates that contractor expectations for growth may be overly optimistic compared to current market conditions. Project owners should carefully evaluate contractor financial health and bonding capacity before awarding contracts.
As interest rates stabilize and potential fiscal policy changes emerge, monitoring the ABC Backlog Indicator and Confidence Index will be critical for understanding construction market direction. The December 2025 report will provide the first indication of whether October's weakness represents a bottom or if further deterioration is likely.
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