U.S. Construction Backlog Hits Nearly 2-Year High Amid Tariff Concerns

Key Findings from the ABC Report

• Backlog Growth: Contractors with annual revenues exceeding $100 million have seen significant increases in backlog over the past year. Smaller contractors have also experienced modest growth, though those with revenues between $30 million and $100 million reported a year-over-year decline.
• Tariff Impact: In April, nearly 22% of contractors reported project delays or cancellations due to tariffs, up from 18% in March. Additionally, 87% have been notified of tariff-related material price increases.
• Profit Margin Expectations: Despite challenges, contractors' confidence in future profit margins has grown. However, the share of respondents expecting sales to decline over the next six months rose to 19% in April, up six percentage points since the start of the year.

Sector-Specific Insights

• Commercial and Institutional Construction: These sectors have seen slight gains in backlog.
• Heavy Industrial and Infrastructure: Both sectors experienced a drop in backlog, a departure from previous months.
• Data Centers: This segment continues to dominate the construction planning market, indicating robust demand.

Despite mounting concerns over tariffs and supply chain pressures, the overall sentiment in the construction sector remains cautiously optimistic. Contractors are increasingly confident about maintaining or even improving their profit margins in the months ahead. However, early signs of softening demand are beginning to appear.

According to ABC Chief Economist Anirban Basu, while many firms are still bullish on near-term performance, a growing number are bracing for potential slowdowns. “There’s still a general sense of optimism,” Basu noted, “but the rise in contractors expecting declining sales—up to 19% in April—suggests that some firms are beginning to anticipate a cooling market.”

This duality—rising backlogs but emerging demand concerns—paints a complex picture of the U.S. construction industry as it navigates economic uncertainty and global trade disruptions.