Data Centers Are Splitting Construction Backlog in Two
Data Centers Are Splitting Construction Backlog in Two
The headline number looks fine. Backlog looks fine. Underneath it, the market has quietly separated into two economies, and most contractors are in the smaller one.
Associated Builders and Contractors reported on July 14 that its Construction Backlog Indicator slipped to 8.8 months in June, down 0.3 months from May but still 0.1 months above June 2025. ABC Chief Economist Anirban Basu noted that the reading was still longer than at any point between September 2023 and April 2026 — and then explained where the strength was actually coming from.
The 13 percent of ABC members holding data center work reported 11.0 months of backlog. The 87 percent without it reported 8.5 months. That split is the entire story, and it tracks firm size almost perfectly: 41 percent of contractors above $100 million in annual revenue have data center work under contract, versus just 8 percent of those below that threshold.
Confidence Is Cracking Where It Counts
ABC’s Construction Confidence Index showed sales and staffing expectations rising in June while profit margin confidence fell to a seven-month low. All three components remain above 50, meaning contractors still expect growth over the next six months. But margin expectations are the reading that moves first when input costs bite, and Basu attributed the slip directly to rising input prices.
By sector, infrastructure carried the longest backlog at 10.1 months, followed by heavy industrial at 9.7 and commercial and institutional at 8.9. Regionally, the South led at 10.3 months while the West trailed at 7.6. In the Northeast, backlog contracted sharply in June and now sits more than a full month below where it was a year ago.
Fuel Is Quietly Eating the Difference
For contractors without a data center anchoring their schedule, the cost side offers no relief. The U.S. average retail price for on-highway diesel reached $5.348 per gallon in the week of August 3, according to the U.S. Energy Information Administration — $1.548 higher than the same week a year earlier, a gain of roughly 41 percent.
For an earthwork, paving, or hauling contractor, that is not a rounding error. It shows up in every equipment hour, every material delivery, and every crew truck, and almost none of it was priced into work bid in early 2026. The June producer price data showed diesel dropping sharply during that month, but retail prices have climbed back since — a reminder that a single favorable data point is not a trend.
What Smaller Contractors Can Actually Do
Chasing hyperscale data center work is not a realistic pivot for a firm doing $20 million a year. The more useful moves are defensive and local: pursue public work, which was one of the few categories still growing in June; tighten escalation and fuel-surcharge language before signing; and get more disciplined about which invitations to bid are worth the estimating hours.
That last point is where visibility matters. When backlog is concentrated among the largest firms, the smaller ones are competing for a shrinking pool of mid-market projects — and the ones that consistently show up when an owner or developer searches for their trade get more chances at that pool than the ones that don’t. The broader cost picture behind all of this is laid out in why input costs are outrunning bid prices, and the newest pressure point arrives August 19 with a fresh round of 50 percent material tariffs.
About MFG Builders
MFG Builders is a construction marketing agency run by former tradespeople. We help contractors of every size get found by the owners, developers, and project managers who are searching right now — because in a market this uneven, being visible is the difference between bidding and waiting.
Frequently Asked Questions
What is the Construction Backlog Indicator, and where does it stand?
It measures the average months of work ABC member contractors have under contract but not yet completed. It fell to 8.8 months in June 2026, down 0.3 months from May but up 0.1 months from June 2025, based on a survey conducted June 22 to July 8.
Why do larger contractors report so much more backlog?
Data center work. Contractors above $100 million in annual revenue hold data center contracts at a 41 percent rate, versus 8 percent for smaller firms. Firms above that threshold reported 12.3 months of backlog, the longest of any size category.
Is contractor confidence declining?
Partly. Sales and staffing expectations rose in June, but profit margin confidence fell to a seven-month low. All three readings remain above 50, meaning contractors still expect growth over the next six months.
Which regions and sectors have the strongest backlog right now?
Infrastructure leads by sector at 10.1 months, followed by heavy industrial at 9.7 and commercial and institutional at 8.9. By region, the South is strongest at 10.3 months and the West weakest at 7.6. The Northeast contracted sharply in June.
How much have diesel prices risen for contractors?
The U.S. average on-highway diesel price hit $5.348 per gallon the week of August 3, 2026 — $1.548 above the same week a year earlier, roughly a 41 percent increase. That affects every equipment hour, delivery, and crew truck.
What options do smaller contractors have without data center work?
Public work was one of the few growing categories in June. Beyond that, the practical moves are tightening escalation and fuel-surcharge language before signing and being more selective about which bid invitations justify the estimating time.
Does the backlog indicator predict future construction activity?
It signals near-term workload for the firms surveyed, since it counts work already under contract but not completed. It does not forecast new project starts, and as the 2026 data shows, a healthy average can mask a wide gap between segments.
Works Cited
“ABC’s Construction Backlog Indicator Slips, Contractors Remain Confident in June.” Associated Builders and Contractors, 14 July 2026, www.abc.org/News-Media/News-Releases/abcs-construction-backlog-indicator-slips-contractors-remain-confident-in-june. Accessed 6 Aug. 2026.
“Gasoline and Diesel Fuel Update.” U.S. Energy Information Administration, 4 Aug. 2026, www.eia.gov/petroleum/gasdiesel/. Accessed 6 Aug. 2026.