Tariff Pressures Mount as Construction Backlog Hits 8.5 Months

The latest data from Associated Builders and Contractors (ABC) shows a slight uptick in construction backlog across nonresidential sectors, but growing concerns over newly announced tariffs are beginning to influence contractor confidence.

According to ABC’s Construction Backlog Indicator, the average backlog among surveyed contractors increased to 8.5 months in March, up 0.3 months from the same time last year. While this marks modest growth, the long-term gains appear concentrated in the infrastructure sector, with other segments remaining relatively flat over the past 12 months.

At the same time, results from ABC’s Construction Confidence Index reveal a mixed outlook. While contractors reported improved expectations for staffing levels over the next six months, their confidence in sales and profit margins slipped. Despite these declines, all three measures—staffing, sales, and profit margins—remain above 50, the threshold indicating growth expectations.

Tariff Impacts Emerging

Contractors who responded to the survey after the April 2 announcement of new tariffs expressed growing concern. Among those respondents:

• Fewer than 26% expected profit margins to improve in the next six months.
• Over 40% anticipated shrinking margins.
• Nearly 80% said suppliers had notified them of tariff-related material cost increases.
• About 20% experienced project delays or disruptions during March due to tariff issues.

“While March data reflects general optimism, much of that sentiment was recorded before the latest economic policy changes,” said Anirban Basu, chief economist at ABC. “The introduction of elevated tariffs has already prompted some contractors to pause or reconsider upcoming projects, and we expect further uncertainty if these conditions persist.”

Basu also noted that some businesses may delay or cancel capital investments amid rising material costs and market volatility.

Looking Ahead

The March report offers a snapshot of construction conditions prior to the full impact of tariff changes. With materials pricing in flux and contractors reassessing their margins, industry leaders are watching closely to see how economic policies will shape project planning in the months ahead.

For more details on the Construction Backlog Indicator and Construction Confidence Index, including full data tables and methodology, visit abc.org/economics.