The big picture: The construction industry saw a significant increase in its backlog to 8.7 months in September, largely fueled by demand for data centers.

Why it matters: Despite robust demand, construction firms are facing severe pressure on profit margins due to escalating material and labor costs, impacting their financial health and ability to invest.

Between the lines:

• Construction backlog reached 8.7 months in September.
• Data center projects are a primary driver of this growth.
• Soaring material and labor costs are suppressing profit margins.

Staffing & HR impact: Rising labor costs in construction will intensify competition for skilled trades, potentially increasing recruiter mobility and driving up staffing firm margins for specialized placements. HR departments must strategize on compensation and retention to mitigate talent drain.

The bottom line: Strong demand is being offset by cost pressures, creating a challenging environment for construction sector profitability.