Michael Latas & Associates
Construction Report - June 2026

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​Labor Market Remains Resilient
The latest U.S. employment report released on June 5 showed the economy added 172,000 jobs in May, significantly exceeding expectations of approximately 80,000. The unemployment rate remained steady at 4.3%, while March and April payroll figures were revised upward, signaling a stronger labor market than previously reported.
For construction employers, this is encouraging news. A stable labor market continues to support private investment, public infrastructure spending, and project financing activity. While construction-specific employment data was mixed earlier in the spring, industry employment remains above year-ago levels in most states. According to the Associated General Contractors of America, 33 states and Washington, D.C. added construction jobs year-over-year through March 2026.
 
Backlog Reaches Highest Level in Nearly a Year
The most closely watched measure of contractor demand, the Associated Builders and Contractors (ABC) Construction Backlog Indicator, increased to 8.8 months in April, the highest level in ten months. Backlog increased both month-over-month and year-over-year, driven primarily by large-scale projects in data centers, manufacturing, energy, and infrastructure.
ABC Chief Economist Anirban Basu noted that the growth remains concentrated among larger contractors and firms involved in technology and infrastructure projects, particularly those benefiting from AI-driven data center construction.
Current ABC Backlog Trends

• April 2026 Backlog: 8.8 months
• March 2026 Backlog: 8.6 months
• January 2026 Backlog: 8.0 months
• Highest reading in approximately ten months

 
Major Contractor Earnings Continue to Impress
AECOM Reports Record Backlog
Global infrastructure leader AECOM reported second-quarter fiscal 2026 results highlighted by:

• Record company backlog
• Total backlog up 8% year-over-year
• Strong 1.2x book-to-burn ratio
• Double-digit growth in project pipeline
• Continued strength in transportation, water, environmental, and infrastructure markets

The company noted particularly strong demand driven by federal infrastructure funding, water investments, and transportation modernization programs.
 
EMCOR Delivers Record Quarter
Specialty contractor EMCOR Group reported another exceptional quarter:

• Record quarterly revenue of $4.63 billion
• Revenue growth of 19.7%
• EPS growth of 30%
• Remaining performance obligations (backlog equivalent) reached a record $15.6 billion
• Backlog increased 32.9% year-over-year
• Full-year guidance raised for 2026

Management cited continued demand from:

• Data centers
• Semiconductor facilities
• Advanced manufacturing projects
• Healthcare infrastructure
• Mission-critical facilities

 
M&A Activity Continues
Construction and engineering M&A activity remains active despite elevated interest rates. Strategic buyers continue targeting firms with exposure to:

• Data centers
• Electrical contracting
• Mechanical systems
• Infrastructure services
• Environmental and water engineering
• Industrial automation

The strongest acquisition premiums continue to be paid for companies with recurring maintenance revenue, specialized technical capabilities, and exposure to AI-related construction spending.
 
Key Trends to Watch
1. Data Centers Remain the Hottest Market
AI infrastructure investments continue to generate unprecedented demand for electrical, mechanical, and civil contractors. Multiple earnings calls this quarter highlighted data centers as a primary growth driver.
2. Infrastructure Funding Continues to Flow
Federal funding from infrastructure legislation is supporting transportation, water, and energy projects nationwide, benefiting engineering firms and heavy civil contractors.
3. Labor Remains the Primary Constraint
While hiring has improved, skilled craft labor shortages remain one of the industry's biggest challenges. Contractors continue reporting difficulties recruiting electricians, pipefitters, HVAC technicians, project managers, and superintendents.
4. Backlog Strength Suggests Continued Growth
With backlog near a ten-month high and major public contractors reporting record order books, the industry enters the second half of 2026 with substantial revenue visibility.