Associated Builders and Contractors reported that its Construction Backlog Indicator fell to 8.8 months in June 2026, down 0.3 months from May but up 0.1 months from June 2025, according to an ABC member survey conducted June 22 through July 8. The reading tracks the average number of months of work contractors have under contract but not yet completed.
Regional and Sector Breakdown in the Construction Backlog Indicator
Only the Middle States region saw backlog growth on a monthly basis in June, while the Northeast region contracted sharply and is now down by more than a month from a year ago. By sector, infrastructure carried the longest backlog at 10.1 months, followed by heavy industrial at 9.7 months and commercial and institutional work at 8.9 months. By region, the South held the longest backlog at 10.3 months, while the West held the shortest at 7.6 months.
Data Center Construction Widens the Gap by Company Size
ABC Chief Economist Anirban Basu said continued data center construction is the main force keeping overall backlog elevated. Contractors with data center work under contract, just 13% of ABC members, reported significantly higher backlog at 11.0 months, compared to 8.5 months for the 87% of members without it. Basu noted the divide falls heavily along company size, with only 8% of contractors under $100 million in annual revenue holding data center work under contract, compared to 41% of contractors above that threshold.
Confidence Holds Even as the Construction Backlog Indicator Slips
"While backlog declined in June, it's still longer than any point from September 2023 to April 2026," Basu said. ABC's Construction Confidence Index readings for sales and staffing levels increased in June, while the reading for profit margins slipped to a seven-month low. Basu attributed the pressure on margin confidence to rising input prices, though expectations remain above levels seen in the second half of 2025.
How the June Reading Compares to Recent Months
The 0.3-month monthly decline follows several months in which backlog had held roughly steady, and the year-over-year increase of 0.1 months suggests overall demand has not deteriorated materially compared to summer 2025, even as the monthly trend softened. ABC's survey methodology, which draws on member-reported backlog across commercial, institutional, industrial, and infrastructure segments, is widely used by contractors and material suppliers as a forward-looking demand signal ahead of hard construction-spending data.
All Three Confidence Index Components Point to Growth
ABC reported that the readings for all three Construction Confidence Index components, sales, staffing, and profit margins, remain above the threshold of 50 that signals contractors expect growth over the next six months, even with the profit-margin reading at its lowest point in seven months. That combination, a slipping backlog alongside confidence readings still pointed toward expansion, is consistent with a market contractors describe as softening at the margins without yet signaling a broader downturn.
Why the Backlog Data Matters to Mechanical and HVAC Contractors
Construction backlog is a leading indicator for the mechanical and HVAC contracting pipeline, since new building starts tracked by ABC's survey typically translate into installation and commissioning work months later. The widening gap between large and small contractors on data center-related backlog points to an uneven demand picture within commercial HVAC, where firms without a foothold in data center cooling work are seeing softer backlog growth than the headline number suggests. Mechanical contractors bidding institutional and commercial projects can use the regional and sector breakdown to gauge where demand is concentrated, since a contractor operating in the South or on infrastructure-adjacent projects is currently working against a considerably longer backlog than one concentrated in the West or in general commercial and institutional work. ABC's monthly survey is closely watched by material suppliers and equipment distributors as well as contractors, since sustained backlog growth in a region or sector typically precedes an increase in orders for rooftop units, chillers, and other commercial HVAC equipment tied to the projects contractors are working through. The June reading's split between confident sales and staffing expectations on one hand and softening profit-margin confidence on the other also mirrors a pattern mechanical contractors have described anecdotally this year, where demand remains solid but rising material and labor costs are compressing margins on jobs already under contract. That combination gives HVAC equipment and material suppliers a mixed signal heading into the second half of 2026: order volume tied to backlog remains healthy by recent historical standards, even as contractors report tighter margins on the work already secured, a dynamic that could shape how aggressively contractors push back against further manufacturer price increases in the coming months.
