The headline number looks good. The Associated Builders and Contractors’ Backlog Indicator rose to 8.8 months in April, up 0.2 month-over-month and a 10-month high. The Confidence Index — sales, profit margins, staffing — improved across all three components and held above the 50-point threshold that separates expected growth from contraction.
Read the breakout, though, and the picture changes.
The data center premium is now the only premium
42% of contractors with more than $100 million in annual revenue report being under contract on at least one data center project. That cohort’s average backlog: 12.2 months. The cohort that doesn’t have data center work: 8.3 months. The gap is now wider than the entire headline reading has moved in two years.
If you strip the data center contractors out, the rest of the nonresidential market is still running below the 9-month line that historically signals healthy pipeline. That doesn’t mean the broader market is in trouble — it just means ABC’s headline reading is no longer a fair measure of how the average contractor is doing. It’s a measure of how the data-center-exposed sub-segment is doing, plus a much-softer-than-it-looks remainder.
ABC’s own analysts have started flagging this. Anirban Basu, ABC chief economist, used the phrase “narrow recovery” in the release accompanying the April reading.
What the Confidence Index does and doesn’t say
The Confidence Index reading is more useful than the backlog number because it captures forward sentiment rather than committed work. All three sub-indices — sales expectations, profit-margin expectations, staffing expectations — are above 50 and improved from March 2026 and April 2025.
A few caveats. The profit-margin component is the weakest of the three, which lines up with what contractors have been saying about labor costs and material price pressure through Q1. Staffing is the strongest, which mostly reflects contractors planning to add headcount for known data center work rather than broad-based hiring confidence.
What to watch from here
Two things matter more than the May Backlog Indicator will: whether the data center pipeline continues into 2027 at this scale, and whether the rest of the nonresidential market — commercial offices, healthcare, education — starts picking up enough to offset the inevitable point at which hyperscaler capex curves flatten. The Dodge Momentum Index hinted at the latter in April with a 6% bump driven by commercial planning. If that holds, the next backlog reading might finally show a broader recovery instead of the increasingly narrow one we have now.
For now, the headline number is real but the dispersion underneath it is the more important read.