2026 Construction Outlook: Growth in Select Markets Amid Broader Uncertainty

The construction industry is heading into 2026 with a mixed outlook, according to the 2026 Construction Hiring & Business Outlook survey released by the Associated General Contractors of America (AGC) and Sage. While some sectors continue to show strong demand, overall contractor confidence has softened compared to last year.

Contractors reported fewer bidding opportunities overall, with expectations declining in more market segments than in 2025. Five out of 17 construction categories now show negative outlooks, up from just two last year. Concerns about the broader economy, the risk of recession, rising material costs, labor shortages, tariffs, and immigration enforcement all contributed to the more cautious sentiment.

Bright Spots: Data Centers, Power, and Health Care

Despite the cooling outlook, several private-sector markets remain strong. Data centers continue to lead all categories, with the highest growth expectations of any sector. Power generation and infrastructure projects also saw increased optimism, along with health care construction—particularly clinics, labs, and outpatient facilities.

Public infrastructure segments such as water and sewer, manufacturing, transportation facilities, and highway and bridge construction are expected to see modest growth in demand as well.

Construction Sectors Facing Pressure

Other segments are facing steeper challenges. Contractors reported sharp declines in expectations for lodging, office, and retail construction, which posted the lowest outlooks for 2026. Warehouse, federal, and multifamily construction also dropped to their weakest levels since the COVID-era slowdown. Education construction continues its downward trend, with both K–12 and higher education projects slipping into negative territory.

Workforce, Tariffs, and Immigration Uncertainty

Labor availability remains a major concern, with more than half of contractors reporting an insufficient supply of workers. At the same time, tariffs have significantly affected material pricing. Many firms responded by increasing bid prices, adding cost-sharing provisions to contracts, or passing tariff-related costs on to project owners.

Immigration enforcement has also impacted the workforce. One-third of construction firms nationwide reported disruptions related to enforcement actions, including missing workers, affected subcontractors, and even job site visits by authorities. These challenges are particularly impactful given the construction industry’s reliance on immigrant labor.

Project Delays and Financing Challenges

Project uncertainty remains high. A majority of contractors reported that owners postponed or canceled projects within the past six months. Funding challenges, high financing costs, and uncertainty around public and private investment continue to slow project starts, alongside rising labor and material expenses.

Partner with Construction Bonding Specialists

In a construction market defined by uncertainty, changing demand, and tighter project controls, having the right surety partner is more important than ever. Construction Bonding Specialists works closely with contractors of all sizes to secure the bonding support they need to pursue opportunities confidently—even in challenging conditions.

If you have questions about bid bonds, performance bonds, or long-term surety strategies, contact Construction Bonding Specialists today to discuss your construction bonding needs.

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a dedicated surety-bond-only agency with decades of bonding experience, we strive to discover surety solutions for all types of cases, ranging from routine to challenging. Contact us online or call us at 248-349-6227 to learn more.

Written by the Digital Marketing Team at Creative Programs & Systems: https://www.cpsmi.com/.