Big US contractors piling on more data centre orders

Aerial view of a data centre under construction in Columbus, Ohio (Image: Snehit Photo via AdobeStock - stock.adobe.com)

That’s according to the latest Construction Backlog Indicator from Associated Builders and Contractors (ABC).

Its survey of ABC members, conducted from 20 April to 4 May, found that the average backlog rose to 8.8 months in April, up 0.2 months on March.

While contractors with revenue of $100 million or above are enjoying significantly larger backlogs, however, all other contractor size categories have a smaller backlog than they did a year ago.

Despite reports of reduced backlogs for smaller contractors, ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels also increased in April.

The readings for all three components are higher than they were one year ago and remain above the threshold of 50, indicating expectations for growth over the next six months.

ABC chief economist Anirban Basu said, “While backlog surged to a 10-month high in April, the industry’s recent momentum is highly concentrated among a subset of contractors.

“Booming data centre construction has almost exclusively benefited the largest ABC members; 42% of contractors with more than $100 million in annual revenues are under contract to work on data centre projects. The same is true for just 7% of contractors with less than $100 million in annual revenues. Critically, contractors under contract to work on data centres have significantly longer backlog (12.2 months) than those that are not (8.3 months).

He added that despite the diverging levels of backlog, ABC members of all sizes remain confident about the outlook, with just one in five expecting profit margins to shrink over the next six months.

The upshot is that weak construction spending data, the recent rise in oil prices and emerging materials price escalation have not diminished ABC member confidence,” he said.

Data centre work adds to job numbers

Data centre projects also appeared to be one of the main drivers of an increase in construction employment in April.

Analysis of government data by the Associated General Contractors of America (AGC) registered an increase of 9,000 construction jobs in April, with gains in non-residential construction offsetting declines in residential activity.

Construction employment totalled 8,321,000 in April, seasonally adjusted, according to the AGC. Over the past 12 months, the industry has added 50,000 jobs, an increase of 0.6%.

Non-residential construction increased by 19,000 positions in April and added 98,600 jobs over the past 12 months. But residential construction employment declined by 10,400 jobs in April and 49,200 positions over the past 12 months.

Jeffrey D. Shoaf, the chief executive officer of the AGC said, “Data centre construction is one of the main reasons the construction industry continues to add jobs and boost wages faster than the overall economy. The more communities do to restrict construction of data centres, the more likely future construction growth will be dampened or even decline.”