ABC: Construction backlog inches lower, staffing levels expected to grow

Associated Builders and Contractors (ABC) reported today that its Construction Backlog Indicator fell to 8.3 months in February, according to an ABC member survey conducted Feb. 20 to March 5. The reading is up 0.2 months since February 2024. 

Backlog fell monthly for contractors with less than $100 million in annual revenues while increasing sharply for contractors with greater than $100 million in annual revenue. The largest contractors have also accounted for most of the increase in backlog observed over the past year.

ABC’s Construction Confidence Index reading for staffing improved, while the reading for profit margins declined. The reading for sales was unchanged after rounding. The readings for all three components remain above the threshold of 50, indicating expectations for growth over the next six months.

“While many other economic sentiment readings have deteriorated in recent months, contractors remain optimistic that business conditions will improve through the first half of 2025,” said ABC Chief Economist Anirban Basu. “Nearly 60 percent of contractors intend to increase their staffing levels over the next six months, the highest share in over two years. These hiring expectations suggest that the recent slowdown in industrywide employment is largely confined to the residential segment. Yes, there are some broader signs of emerging economic weakness, but the results of this ABC member survey suggest that contractors will remain busy over the next few quarters.”

The construction industry had 236,000 job openings on the last day of January, according to an ABC analysis of data released today in the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey. JOLTS defines a job opening as any unfilled position for which an employer is actively recruiting. Industry job openings increased by 31,000 last month but are down by 171,000 from the same time last year.

“While construction job openings remained subdued in January, industrywide labor force churn increased meaningfully,” Basu says. “Both hires and separations—including layoffs, discharges and quits—accelerated to the fastest rate since the first half of 2024. 

“Yes, recent construction spending data and investor caution in the face of volatile trade policy represent a cause for concern but nearly 6 in 10 contractors expect their staffing levels to grow over the next several months, according to ABC’s Construction Confidence Index. That, along with healthy industrywide job growth in February, suggests job openings should continue to trend higher in the coming months.”