Building contractors are optimistic about sure private-sector segments and have excessive hopes for many kinds of public-sector work, in keeping with survey outcomes the Related Common Contractors of America and Sage launched. But contractors have very low expectations for a number of private-sector market segments, stay involved about labor shortages and are fearful supplies costs will climb amid threats of latest tariffs, in keeping with A Yr within the Stability: The 2025 Building Hiring and Enterprise Outlook.
“2025 presents fairly a number of vivid spots for the development trade even because the outlook for some private-sector segments stays fairly dire,” mentioned Jeffrey Shoaf, the affiliation’s Chief Govt Officer. “Companies count on regulatory aid will assist drive demand and they’ll proceed to rent, once they can, and increase investments in applied sciences, significantly synthetic intelligence.”
Go to www.agc.org/2025-construction-hiring-and-business-outlook to observe a fast video in regards to the outcomes.
Key Findings
The online studying—the share of respondents who count on the accessible greenback worth of tasks to increase in comparison with the share who count on it to shrink—is constructive for 15 of the 17 classes of building included within the survey. The very best internet studying, 42 p.c, is for information facilities.
Contractors are additionally very bullish in regards to the prospects for water and sewer tasks, with a internet studying of 35 p.c, and for energy tasks, with a internet studying of 32 p.c. Additionally they are bullish about healthcare building, with a internet of 27 p.c for non-hospital healthcare amenities, equivalent to clinics, testing amenities and medical labs, and 24 p.c for hospitals.
Survey respondents are largely constructive as nicely about manufacturing plant building, with a internet studying of 25 p.c. Contractors are additionally optimistic in regards to the schooling sector with a internet studying of 13 p.c for kindergarten-to-Twelfth-grade colleges and 12 p.c for larger schooling building.
5 different segments have readings that vary from reasonably constructive to damaging. The online studying for warehouse building is 14 p.c, whereas the studying for multifamily residential building is 12 p.c. Contractors have a barely constructive internet studying, 7 p.c, for lodging. In the meantime, the web studying for personal workplace building is -3 p.c. And the outlook for retail tasks is -5 p.c.
Expectations Excessive on Infrastructure
Affiliation officers famous that contractor expectations are excessive for a spread of infrastructure segments. The online studying for transportation buildings, equivalent to airport and rail tasks, is 29 p.c. Expectations for bridge and freeway work are internet 24 p.c constructive. The studying for federal contracts, for companies such because the Common Companies Administration and the US Military Corps of Engineers, is 22 p.c. One different public class—public buildings—drew a reasonably constructive internet studying of 14 p.c.
“One purpose contractors have a comparatively constructive outlook for a lot of public sector market segments is that extra contractors are beginning to see the results of elevated federal investments in infrastructure,” mentioned Ken Simonson, the affiliation’s Chief Economist. He famous that 18 p.c of respondents say they’ve labored on new federally funded infrastructure tasks, double the 9 p.c who mentioned that was the case a yr in the past.
Labor Considerations
The development economist famous that almost all companies anticipate including staff in 2025 to accommodate the upper demand for many kinds of tasks. Greater than two-thirds of the respondents count on so as to add to their headcount, in comparison with solely 10 p.c who count on a lower.
But he cautioned that greater than three out of 4 companies report having a tough time filling both hourly craft positions, 78 p.c, or salaried openings, 77 p.c. As well as, the bulk expects that hiring craft staff will proceed to be arduous or will turn into more durable. Solely 12 p.c say it’ll turn into simpler or stay simple to rent.
Postponements and Cancellations
Contractors proceed to see a big variety of venture postponements and cancellations. Roughly two-thirds of respondents say tasks have been postponed or canceled. Forty-two p.c of companies report tasks had been postponed in 2024 however rescheduled, whereas 34 p.c of respondents report tasks had been postponed or canceled and never rescheduled. Sixteen p.c have already skilled postponement or cancellation of a venture that had been scheduled for both the primary half of 2025 or later.
Simonson famous that provide chains are coming again on-line, nevertheless. Practically half of respondents report no supply-chain points in 2024. Solely 23 p.c of respondents in 2024 and simply 9 p.c in 2023 mentioned they’d had no such issues. To deal with—or keep away from—issues, 41 p.c of respondents have accelerated purchases after successful contracts, whereas 32 p.c have turned to various suppliers, and 25 p.c have specified various supplies or merchandise.
High Considerations
Amongst contractors’ prime considerations for 2025, the three most ceaselessly listed are all workforce associated. Sixty-two p.c decide rising direct labor prices as one in every of their prime three considerations, whereas 59 p.c checklist inadequate provide of staff or subcontractors, and 56 p.c identify employee high quality. The one different concern cited by a majority—54 p.c—of respondents is supplies prices. Given the availability chain enhancements, this concern is probably going associated to President-elect Trump’s threats to impose a broad vary of latest tariffs, Simonson noticed.
Officers with Sage famous that building companies are more and more leveraging know-how to deal with trade challenges equivalent to labor shortages and productiveness calls for. Synthetic intelligence leads the way in which because the know-how with the most important anticipated improve in funding, cited by 44 p.c of companies. Different key areas for elevated funding embrace doc administration software program (40 p.c), accounting software program (36 p.c), and venture administration software program (35 p.c).
“AI’s potential to revolutionize building workflows is driving elevated curiosity and funding,” mentioned Dustin Stephens, International Head of Building, Sage. “Main building companies are using developments in AI, cloud, and cell applied sciences to function extra effectively and deal with advanced tasks with higher agility.”
Stephens added that whereas cloud adoption stays regular—61 p.c of companies now use cloud-based venture administration instruments—cybersecurity has emerged as the highest IT problem, cited by 41 p.c of respondents, whereas discovering the time to implement and practice on new know-how got here in second with 38 p.c of companies choosing it as a prime IT problem. “As companies embrace innovation, addressing safety considerations and streamlining implementation will likely be vital to sustaining development in a quickly evolving trade,” he mentioned.
The Phrase from Washington
Affiliation officers mentioned they’re urging the brand new administration to work with Congress to ascertain new packages for short-term work visas which can be devoted to the development trade. They’re additionally urging President Trump and Congress to cross the Stronger Workforce for America Act, which boosts funding for post-secondary building coaching packages and to spice up funding for high-school building coaching packages.
They’re additionally urging President Trump to revoke President Biden’s govt order imposing venture labor agreements for any federal building venture price $35 million or extra. They’re additionally urging the president to be sparing in his imposition of latest tariffs and to implement most of the measures to streamline allowing that Congress licensed however President Biden largely ignored.
“Will probably be an excellent yr for the development trade if the Trump administration works with us to discover a solution to handle supplies shortages, keep away from supplies worth inflation, take away limits on who can work on federal tasks and streamline the allowing course of,” Shoaf mentioned.
Go to www.agc.org for A Yr within the Stability: The 2025 Building Hiring and Enterprise Outlook. Go to www.agc.org/2025-construction-hiring-and-business-outlook for the survey outcomes or to watch a fast video in regards to the outcomes.