In February, the construction industry experienced a slight decline in project backlogs, settling at 8.3 months, marking a 1% decrease from January, based on a survey conducted by Associated Builders and Contractors between February 20 and March 5. This reduction primarily affected contractors with annual revenues under $100 million, while larger firms reported an increase in their workloads. Despite this disparity, overall contractor confidence remained steady in February, though expectations for profit margins diminished and sales projections stayed constant.

The data underscores a widening gap between large and small contractors within the industry. Larger firms, boasting revenues exceeding $100 million, are actively expanding their project pipelines. Executives from public construction companies have expressed optimism about robust demand for infrastructure, data centers, and energy projects, downplaying concerns over tariffs and policy changes. Conversely, smaller firms are grappling with diminishing backlogs, yet the industry as a whole anticipates a rebound in business conditions later this year.

According to Anirban Basu, ABC's chief economist, despite recent economic sentiment readings showing some deterioration, contractors remain hopeful that business conditions will improve significantly by mid-2025. Notably, hiring expectations surged during the month, with nearly 60% of contractors planning to boost staffing levels over the next six months. This figure represents the highest level of hiring intentions among contractors in over two years, indicating that the recent slowdown in employment across the industry is largely confined to the residential sector.

Basu emphasized that although there are some broader signs of emerging economic weakness, the results of the ABC member survey suggest that contractors will continue to be busy over the coming quarters. The findings highlight the resilience of the construction industry amidst shifting market dynamics and underscore the importance of strategic workforce planning to meet anticipated demands.