Impact of tariffs ‘increasingly apparent’ but US construction firms remain confident

An illustration representing rising US construction material prices. (Image generated with AI)

The reading was up 0.1 months since May 2024 but declined by 0.3 months on a month-on-month basis.

The American construction and contracting trade association said the decline was driven entirely by a drop in the South (including metros in highly populated states like Texas and Florida), which was the only region to post a month-over-month decrease.

The South, which has a large share of industrial megaprojects (data centres, chip fabs, logistics hubs), still maintains the longest backlog of any region, at 9.4 months, but this was down from 10.3 months in April 2025.

Speaking to Construction Briefing, ABC chief economist Anirban Basu said, “The decline is likely due to market saturation. Because the South had much construction activity over the past few years, that led to more contractors operating in the region [and], as some segments start to cool off, backlog is falling accordingly.”

Meanwhile, on a year-over-year basis, only the Northeast has seen backlog growth, with the South, West, and Midwest all reporting declines.

ABC’s Construction Confidence Index for May showed mixed sentiment. The reading for profit margins rose, but expectations for sales and staffing levels slipped. All three indicators remain above the threshold of 50, indicating continued growth is expected over the next six months.

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“The impacts of tariffs are increasingly apparent, with nearly one in four ABC member contractors reporting tariff-related project cancellations or delays in May,” said Basu. “While 87% of survey respondents have been notified of tariff-related materials price increases, profit margin expectations actually improved in May.”

However, the ABC’s surveys were conducted prior to the enforcement of 50% global steel and aluminium tariffs levied by the US on 4 June.

Basu noted, “Margins will likely come under pressure in the coming months.

“Despite this potential headwind, approximately six out of ten contractors expect their sales to increase over the next two quarters, suggesting widespread optimism about the outlook.”

Table courtesy Associated Builders and Contractors