Key findings

Focused growth in a cautious market

Spending is steady, but momentum remains weak

Construction activity is broadly stable. In January 2026, total construction spending reached $2.19 trillion at a seasonally adjusted annual rate.1 That figure was slightly lower than in December, but higher than a year before. The picture is clear. The market is holding its ground, but it is not gaining speed. For owners, this means opportunities remain available, but careful planning is still needed to manage cost, procurement, and delivery risks.

Nonresidential construction remains uneven in Q2

In January, spending for nonresidential construction totaled about $728 billion at a seasonally adjusted annual rate. It fell 0.4% from the prior month.4 Activity is steady, but it is not speeding up. Growth is narrow. Power and digital work remain active. Cloud and AI demand are driving growth in data center projects. These projects now make up a larger share of activity. Owners in this sector should continue to prioritize early procurement, secure power capacity, and plan for ongoing cost and supply chain constraints. Elsewhere, conditions are weaker, with commercial, institutional, and manufacturing work all slowing. Many owners remain cautious, and few new projects are starting. Near-term opportunities remain selective.

Costs are rising again, with energy volatility back in focus

Material and equipment costs are under renewed pressure. Construction prices rose 2.2% in March from the previous month and were 4.8% higher than a year earlier.2 Much of the increase reflects higher oil prices. Cost risk is less about steady inflation and more about energy-driven swings that feed freight and petrochemical-based materials costs. Short-term volatility is increasing the importance of regular cost plan reviews, budget scenario testing, and appropriate contingency allowances.

Uncertainty is driving a wait‑and‑see approach across the market

The Federal Reserve’s April 2026 Beige Book points to rising uncertainty.5 Despite improved conditions in the Middle East, uncertainty continues to slow decisions on hiring, pricing, and investment plans.

Labor demand remains firm, and wage pressure is still a key constraint

Construction is still adding jobs, even as the wider labor market cools. In March, employment in construction increased again while the US unemployment rate held near 4.3%. Within construction, unemployment remained higher at around 6.7%, but this does not indicate ample labor availability.3 Rather, it reflects ongoing mismatches in skills, timing, and location, with many roles remaining difficult to fill. This continued demand for labor may seem at odds with slower project activity. However, many of the projects moving forward are large, complex, and concentrated in a small number of sectors. Data centers, semiconductor, and pharmaceutical projects are major drivers of demand. In markets such as Indiana, Virginia, and Texas, these projects require large numbers of skilled workers and are increasing the competition for labor. As a result, demand for specialized skills remains strong.

Some turnover is typical at this stage of the year, but skilled workers remain hard to find. Wage pressures remain high and pay continues to rise as projects compete for trades ahead of peak season. As a result, early engagement with key trades and allowance for continued wage growth are becoming increasingly important.

1 Value of Construction Put in Place | US Census Bureau 2 Producer Price Index by Commodity: Special Indexes: Construction Materials | FRED 3 Construction: NAICS 23 | BLS 4 Total Construction Spending: Nonresidential in the United States | FRED 5 Beige Book Report: National Summary April 2026 | Federal Reserve Bank of Minneapolis