Construction Activity Hits a Plateau in 2025
The second half of 2025 brings a mixed picture for the construction industry. Overall spending has leveled off as high interest rates and policy uncertainty weigh on new projects, particularly in the commercial and manufacturing sectors. While infrastructure work continues to see funding, its long-term outlook remains uncertain.
Labor Market Cools
Hiring has slowed and wage growth has normalized, yet structural labor shortages in skilled trades remain a challenge. Retiring electricians and restricted immigration policies are tightening supply, making it difficult to staff projects despite reduced demand.
Material Costs Stabilize, But Risks Remain
After years of volatility, input costs have steadied—but they remain elevated compared to pre-pandemic levels. New tariffs and potential supply chain disruptions could drive prices up again, creating uncertainty for project budgets well into 2026.
Sector Breakdown:
• Infrastructure: Still a relative bright spot with highway and utility investments, but political shifts could stall future funding.
• Commercial: Office and manufacturing construction growth has slowed as economic caution and changing workplace trends impact demand.
• Specialty Trades: Demand remains strong, but rising labor costs and workforce shortages continue to squeeze margins, especially in residential trades.
The Bottom Line
Economic, political, and operational uncertainty define the 2025 construction landscape. Firms that strengthen risk management, lock in critical labor early, and stay agile on procurement strategies will be best positioned to navigate the turbulence ahead.