In early 2025, the construction industry witnessed a significant increase in its backlog, reaching 8.4 months in January. This upward trend reversed the slight decline observed in December, as reported by an Associated Builders and Contractors (ABC) survey conducted between January 21 and February 3. The Western region experienced the most substantial growth in backlog, both monthly and year-over-year, while the South maintained the longest backlog at 9.5 months, despite facing a notable decrease over the past year. Despite some challenges, contractor confidence remained robust, with positive outlooks on sales and profit margins, although expectations for staffing levels declined.

The construction sector's resilience was highlighted by Anirban Basu, ABC's chief economist, who noted that the January backlog increase indicates ongoing stability in construction activity as contractors enter 2025. Despite fluctuations in job openings towards the end of 2024, Basu emphasized that the industry broadly anticipates an uptick in construction activity over the next six months. Contractor confidence regarding sales has significantly improved since November's election, reflecting a more optimistic outlook for the future.

The decline in staffing expectations follows a sharp reduction in job openings in late 2024, with open construction positions dropping by 55,000 to 217,000 in December compared to November, according to Bureau of Labor Statistics data. However, Basu pointed out that all three key indicators—sales, profit margins, and staffing levels—remain above ABC's threshold of 50, signaling expectations for growth in the coming months. This suggests that hiring demand could recover sooner rather than later, with job openings potentially rebounding during the first half of 2025.

The industry's strong performance and stable backlog provide a positive outlook for the construction sector in 2025. While challenges such as staffing levels persist, the overall sentiment among contractors remains optimistic, with expectations for increased activity and potential improvements in job openings. The combination of steady backlog growth and improved confidence in sales and profit margins sets a promising tone for the year ahead.