Construction backlogs for contractors in the United States increased for the second consecutive month in September 2026, reaching an average of 8.7 months, according to the Associated Builders and Contractors (ABC). However, despite this growth, contractors are increasingly pessimistic about future sales and profit margins due to rising costs.
What Happened
The increase in backlog is primarily driven by data center projects, which favored larger contractors. ABC's survey, conducted from September 21 to October 5, 2026, revealed that contractors with annual revenues over $100 million are significantly more likely to be engaged in data center work compared to their smaller counterparts. Specifically, about 40% of these larger firms are involved in data center projects, while only 10% of contractors with revenues below $100 million are engaged in similar work.
Interestingly, contractors involved in data center projects reported an average backlog of 11.3 months, which is three months longer than those not involved in such projects. While commercial and institutional backlogs showed resilience, bouncing back to levels not seen since July 2025, heavy industrial backlogs fell to their lowest levels since March 2026.
Despite the backlog growth, more than 25% of contractors expect their profit margins to contract over the next six months, marking the highest level of pessimism since November 2025. The cost pressures that are squeezing profit margins are also impacting sales expectations, which have dropped to an 11-month low.
What This Means for Your Business
For AECM professionals, the current landscape presents both challenges and opportunities. Contractors engaged in data center projects can expect sustained demand, potentially resulting in stable work pipelines. However, the disparity between larger and smaller firms suggests that smaller contractors may need to diversify their portfolios or consider partnerships to access high-demand sectors like data centers.
The ongoing rise in construction costs, driven by materials, labor, and borrowing expenses, underscores the need for effective cost management strategies. Firms should also be vigilant about their compliance with federal regulations such as the Cybersecurity Maturity Model Certification (CMMC) and NIST standards, particularly as they pursue federal contracts in technology-intensive sectors.
What US Operators Should Watch
Decision-makers in the AECM industry should closely monitor federal procurement opportunities, especially those related to data center construction. Additionally, keeping an eye on regulatory developments and compliance deadlines will be crucial as the industry navigates these challenging times. The focus should also be on maintaining competitive positioning through strategic investments and partnerships that align with market demands.
Source: https://www.constructiondive.com/news/contractors-backlog-jumped-september-profit-outlook-fell/832949/. Read the original story ->
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