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Dive Brief:
- Sixty-five percent of contractors expect the data center construction market to grow over the next 12 months, compared to 8 percent who believe it will shrink, according to the Associated General Contractors of America Construction Hiring and Business Outlook to 2026published on January 8.
- Contractors are also increasingly bullish on electrical projects, the only other sector to post a higher reading than 2025. Outside of those two groups, businesses reported weaker.
- For example, the outlook for contractors for transportation and infrastructure in the public sector weakened over the past year, as did expectations for warehouse and multi-family projects in the private sector.
Diving knowledge:
AGC’s recruitment and business survey gives more granularity to developments construction prospects in 2026especially when it comes to childbirth.
The mixed forecast comes as companies expect labor challenges to persist into 2026. For example, about 82% of companies report difficulty filling hourly positions and 80% struggle to fill salaried positions. This has led to project uncertainty, with around 60% of respondents saying a project has been postponed or canceled within six months.
During a webinar to present the survey findings, panelists discussed an industry with booming demand for certain types of construction, especially data centers and energy projects that support these facilities. But for contractors outside of this boom, entrenched challenges are back at the fore.
The share of companies struggling to fill open positions rose to its highest level in three years, said Ken Simonson, AGC’s chief economist. That’s a big concern, along with the fact that experienced professionals are starting to leave the workforce, said Kyle Van Slyke, chief operating officer of Musselman & Hall Contractors, a construction company based in Overland Park, Kansas.
“Our biggest challenge is that workforce,” Van Slyke said on the call. “Senior managers who continue to retire and not rest are really hurting our market.”
Immigration compliance it has also started to affect workflows in workplaces.
About 33% of businesses said they had been affected by immigration enforcement actions in the past six months, either because workers no longer showed up or subcontractors lost labor. Another 6% of companies reported cases of Immigration and Customs Enforcement agents showing up at a workplace or office.
Fees are also a thorn in the side of contractors.
About 70% of contractors said the rates affected by the business in 2025, according to AGC’s outlook. This caused 40% of companies to raise bid prices and about a third to speed up material purchases. About 35 percent of businesses passed most or all of the costs related to fees on to owners, although 11 percent said they absorbed most or all of the costs of the fees, according to the survey.
“2026 offers a handful of clear bright spots amid a growing number of challenges, reflecting the mixed outlook reported throughout the survey,” AGC CEO Jeffrey Shoaf said on the call. “Association officials continue to urge the administration and Congress to address both the short-term and long-term construction labor shortages.”
