Cooling, Not Cracking: What Two Backlog Measures Really Tell Us

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Two widely followed construction indicators softened in their latest readings, but the combined message is less about contraction and more about moderation. The Associated Builders and Contractors (ABC) Construction Backlog Indicator, which measures work already under contract, declined modestly in June. The AIA/Deltek Architecture Billings Index (ABI), a leading indicator of future construction activity, also reported a slight decline in architectural firm backlog during the second quarter.

At first glance, that appears concerning. A closer look suggests the construction pipeline is cooling, not cracking.


What did the ABC Backlog Indicator show?

ABC's Construction Backlog Indicator fell to 8.8 months in June from 9.1 months in May. While backlog declined month-over-month, it remains slightly above year-ago levels and higher than any reading recorded between September 2023 and April 2026.

Infrastructure remains the strongest segment at 10.1 months of backlog, followed by heavy industrial at 9.7 months and commercial/institutional at 8.9 months. Large contractors continue to report exceptionally strong workload levels, averaging 12.3 months of backlog, aided in part by ongoing data center construction activity.

The regional picture is less uniform. While backlog expanded in the Middle States region, the Northeast experienced a significant decline and now trails year-ago levels by more than one month, highlighting uneven conditions across markets.

Perhaps most importantly, contractor sentiment remains positive. ABC's Construction Confidence Index showed improving sales and staffing expectations in June, with all three confidence measures remaining above the 50 threshold associated with growth over the next six months.

What did the ABI show?

The June ABI registered 47.3, nearly three points higher than May but still below the 50 threshold that separates growth from contraction. Billings remain weak overall, but the pace of decline has slowed.

Architectural firm backlog fell to 6.3 months in the second quarter from 6.6 months in the first quarter. However, much of that decline occurred among smaller firms, while larger firms generally reported stable backlog levels.

The more forward-looking components of the ABI were notably stronger than the headline billings number suggests. The Project Inquiries Index, which measures owner interest in potential future work, increased to 56.1 in June. The Design Contracts Index registered 49.8, indicating that new contract activity was essentially flat rather than declining materially.

Why Do The Two Signals Not Align?

It is tempting to view the ABI and ABC as opposite ends of the same pipeline. While there is certainly overlap, today's market is more complicated.

Large-scale data centers, advanced manufacturing facilities, infrastructure work, and other megaprojects are increasingly influencing contractor backlog. These projects can generate enormous construction volume and contractor workload while having a weaker relationship with traditional architectural billing activity. ABC itself noted that contractors performing data center work report significantly higher backlog than those that do not.

As a result, the two indicators should be viewed as complementary rather than interchangeable. The ABI is heavily influenced by traditional building sectors, while ABC backlog increasingly reflects the impact of large industrial and technology-driven projects.

What Does This Mean for Us in Preconstruction?

The latest data suggests that pipeline growth is slowing, but there is limited evidence that overall demand is materially deteriorating.

Several indicators remain constructive:

  • Contractor backlog remains historically healthy.
  • Contractor confidence remains expansionary.
  • The pace of AIA billings contraction moderated in June.
  • Project inquiries remain strong.
  • Design contracts have stabilized.

At the same time, there are signs that the market is becoming more selective:

  • Architectural billings remain below growth levels.
  • Architectural backlog declined during the second quarter.
  • Contractor backlog eased in June.
  • Smaller firms appear to be under greater pressure than larger firms.

The Bottom Line

The strongest conclusion from the latest data is not that the pipeline is weakening, but that its rate of growth is moderating.

Contractor backlog and architectural backlog both softened, but healthy workload levels, improving confidence, stronger inquiries, and stable design contracts suggest the construction pipeline is losing momentum rather than losing demand.

For now, the evidence points to a market that is moderating rather than deteriorating.

Cooling, not cracking.



Sources: Associated Builders & Contractors, Construction Backlog Indicator (June 2026); AIA/Deltek Architecture Billings Index (June 2026).


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