The short version
- — Average construction backlog fell to 8.0 months in July, the lowest since January, per Associated Builders and Contractors data.
- — Small and mid-sized contractors experienced their lowest backlog levels since March 2020, excluding the data center sector.
- — Despite declining backlogs, a majority of contractors anticipate growth over the next six months.
What happened
Associated Builders and Contractors announced on August 11 that the Construction Backlog Indicator (CBI) dropped to 8.0 months in July. This represents a decrease of 0.8 months compared to both the previous month and the same time last year, placing it at its lowest point since January. The CBI tracks signed commercial, industrial, and infrastructure work that has not yet been completed, as reported by Contractor magazine. While the data center industry shows strong figures, other sectors face difficulties. The report notes that all industry segments, regions, and company sizes saw a reduction in their backlogs during July, except for the South, which maintains a larger backlog than it did a year ago. Small and mid-sized contractors, specifically those with $30-$50 million in annual revenue, experienced their lowest backlog levels since March 2020. Separately, the Construction Confidence Index remains above 50 for sales, staffing, and profit margins, suggesting that contractors generally anticipate growth over the next six months.
Why it matters to your shop
When the overall pipeline of commercial and industrial work shrinks, it often signals increased competition for available projects. For independent tradespeople and small shops not involved in large-scale data center construction, this trend can translate into fewer bidding opportunities or greater pressure to lower prices to secure jobs. Understanding this broader market shift helps you anticipate changes in local demand and plan your business strategy, such as adjusting marketing efforts or considering new service offerings to diversify your revenue streams.
Lower backlog levels, particularly for small and mid-sized firms, also mean that work might be less consistent than it has been in previous periods. This could affect your ability to forecast revenue, manage cash flow, and plan for staffing needs. While confidence about future growth remains, the immediate challenge lies in maintaining a steady stream of work, which requires vigilance in project acquisition and careful management of your financial resources.
What a CAA member does about it
In a shifting market, a Craftsmen Association of America member focuses on what they can control: delivering exceptional quality and clear communication. This means writing comprehensive, unambiguous scopes of work for every project, providing honest and transparent pricing, and meticulously documenting all project details from start to finish. Consistently standing behind your work reinforces your shop's reputation, making you a trusted choice even when competition is stiff. Joining the CAA signals your commitment to these high professional standards.
Reported by Contractor. This brief is an original CAA summary written for members; the facts belong to the original reporting.
Read the original report