Despite the drop in backlog, ABC’s Construction Confidence Index showed increased expectations for sales, profit margins and staffing in January. Sales expectations improved compared with a year ago, while profit margin and staffing expectations were slightly lower. All three measures remained above 50, indicating expectations for growth over the next six months.

“Backlog fell to a four-year low in January, yet contractors remain shockingly sanguine about the near-term outlook,” said ABC Chief Economist Anirban Basu. He noted that 13% of contractors expect sales to decline over the next six months, the smallest share since February 2022. However, 46% expect their competitors’ sales to fall in the next two quarters. “Whether or not this personal optimism is justified will likely depend on the extent to which borrowing costs can decline in 2026,” Basu said.

Separately, the construction industry added 33,000 jobs in January, according to ABC’s analysis of U.S. Bureau of Labor Statistics data. On a year-over-year basis, industry employment rose by 44,000 jobs, a 0.5% increase.

Nonresidential construction employment increased by 27,900 jobs, including gains of 25,100 in specialty trade and 3,600 in building construction. Heavy and civil engineering lost 800 jobs. The construction unemployment rate was 6.9% in January, while the national unemployment rate across all industries was 4.3%.

“The construction industry, much like the broader labor market, rebounded in January,” Basu said. He added that the industry lost 1,000 jobs in 2025, the first annual decline since 2020, with most losses concentrated in residential construction, where employment has fallen by 43,600 over the past year.

Despite slower employment growth, Basu said contractor confidence remains strong, with members reporting positive expectations for sales and staffing in the months ahead.