A grim assessment from construction industry professionals emerged in October 2025, with nearly 65% of contractors surveyed believing the construction industry is contracting. The concerning sentiment accompanied a sharp decline in contractor confidence metrics, according to an extensive survey from the Associated Builders and Contractors (ABC), one of America's largest construction trade associations.
The October survey, conducted from October 20 to November 4, 2025, revealed significant challenges facing construction companies heading into late 2025 and beyond. Publishing November 14, 2025 in Finance & Commerce, the findings showed that despite sustained activity in specialized sectors, the broader construction market faces real headwinds.
The ABC Construction Backlog Indicator fell to 8.4 months in October, marking the lowest reading since May 2025. While the metric remained unchanged compared to October 2024, the decline from September 2025 of just 0.1 months masks underlying sector weaknesses.
For context, a backlog of 8.4 months means that, on average, construction firms have approximately 8.4 months of work committed and scheduled. This figure is crucial for understanding contractor stability and hiring decisions. When backlog declines, construction companies typically reduce workforce and become more cautious about new commitments.
According to Anirban Basu, Chief Economist at ABC, the October readings reflected a dismal assessment by contractors. "These findings are consistent with an industry that is sustained by still-elevated manufacturing construction and a surging data center sector," Basu stated in the report.
Beyond current backlog concerns, contractor optimism about future business deteriorated significantly. 23% of contractors expect their sales to decline over the next six months—the highest share in over a year, according to ABC's survey.
This expectation of declining sales represents a significant shift in sentiment. When nearly one in four contractors believe sales will contract in the coming half-year, it suggests they're anticipating further project pipeline weakness beyond what October data shows.
The survey revealed a deeply bifurcated market. While overall sentiment is negative, specific sectors continue to attract investment and support contractor activity:
Data Center Construction Outperformance: Around one in seven contractors (approximately 14%) are actively working on data center projects. Critically, those working on data centers report significantly higher backlogs than their peers. Data center-focused contractors averaged 10.9 months of backlog, compared to 8.0 months for those not primarily engaged in data centers.
This gap—2.9 months or roughly 36% higher backlog—demonstrates how concentrated the current activity is. Without data center work, backlog figures would be even more concerning.
Manufacturing Resilience: Heavy industrial and manufacturing construction also maintained relatively stable backlog levels, reflecting ongoing supply chain reshoring and facility investment.
Infrastructure Stability: Commercial, institutional, and infrastructure sector work remained flat or increased in October, providing some stability despite broader market softening.
The ABC survey broke down backlog performance across different construction specialties:
The collapse in backlog for small, diversified contractors is particularly concerning. These firms, which typically lack the specialization and scale of larger contractors, saw their average backlog drop precipitously. This suggests that smaller construction companies are experiencing outsized pain in the current market environment.
ABC's Construction Confidence Index tracks three critical metrics: sales expectations, profit margin projections, and staffing level forecasts. October data showed concerning trends:
Sales Readings: Unchanged from September but reflecting the weakness evident in the 23% of contractors expecting sales declines in the next six months.
Profit Margin Readings: Slipped in October, suggesting that contractors anticipate harder negotiating environments and less pricing power going forward. This reflects the tension between elevated costs and developer resistance to cost pass-throughs.
Staffing Level Forecasts: Fell in October, indicating contractors expect to reduce workforce or maintain current employment levels rather than expand. This is a significant indicator of anticipated slower activity.
Notably, all three metrics remained above the 50-point threshold that indicates growth expectations. However, the declining trend is troubling, especially considering contractors' stated belief that the industry is contracting.
A key takeaway from the October ABC survey is the increasing inequality between specialized, high-demand sectors and the broader market. Contractors positioned in data centers, manufacturing, and select infrastructure work enjoy robust backlogs and stable employment outlooks. Meanwhile, contractors serving commercial real estate, education, hospitality, and residential markets face declining work pipeline and employment uncertainty.
This bifurcation has practical implications:
The ABC survey occurs amid mixed economic signals. While construction spending data shows resilience in some categories, the forward-looking indicators tracked by ABC suggest contractors believe more challenging times are ahead. The disjunction between current activity (still robust in absolute terms) and contractor sentiment (largely negative) suggests expectations of a more significant pullback in 2026.
For Contractors and Builders: The October ABC data suggests the time to strengthen backlog is now. Contractors should actively pursue new work in data centers, healthcare facilities, and manufacturing sectors if they have relevant capabilities. Those lacking these specializations should prepare for tighter margins and more selective project evaluation.
For Workforce: Construction workers should consider whether their current employer has adequate backlog and growth prospects. If a contractor projects sales declines, employment reductions may follow. Workers in data center, manufacturing, or infrastructure construction may have more employment stability than those in commercial real estate or hospitality construction.
For Developers and Project Owners: The survey suggests contractors will face margin pressure and potentially lower productivity costs. However, it also indicates selective contractor availability, particularly for specialized work. Project owners should establish relationships with quality contractors early, as competition for tier-one contractors is likely to intensify.
For Industry Analysts: The ABC survey provides the clearest signal yet that the construction industry is transitioning from growth phase to consolidation phase. The period from late 2025 through 2026 will test whether the industry experiences soft landing (gradual adjustment) or hard landing (significant correction).
The current ABC readings evoke parallels to previous construction market cycles, though not necessarily predicting severe contraction. The combination of falling backlog, declining confidence, and negative sales expectations resembles periods that preceded industry slowdowns, but not necessarily recessions. Much will depend on whether data center investment maintains momentum and whether policy changes in 2025-2026 support infrastructure spending.
Source: Finance & Commerce (November 14, 2025), Associated Builders and Contractors October 2025 Survey
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