Construction employment sits at roughly 8.3 million workers, the highest since federal recordkeeping began, according to the U.S. Bureau of Labor Statistics. Wages rose about 4% over the past year as firms compete for a limited pool of labor.

But those workforce figures mask widening disparities: manufacturing, office and retail activity have softened through much of 2025, while data centers, energy facilities and a handful of industrial megaprojects keep national totals elevated.

ABC’s October Construction Backlog Indicator fell to 8.4 months, its lowest level since May. Nearly 65% of contractors surveyed believe the industry is contracting, despite strength in heavy industrial, infrastructure and data center work.

---

RELATED

U.S. Construction Materials Prices Rise 3.5% as Contractor Backlog Declines

---

Strength on Paper, Diverging in Practice

Spending data underscores the uneven landscape. Through August 2025, total construction outlays were down 1.6% from the same period last year, according to the U.S. Census Bureau. Nonresidential spending declined 1.5% year over year, marking the third monthly drop in four months. 

ABC’s analysis of the same period shows continuing weakness across commercial and manufacturing sectors, with much of the remaining momentum tied to large industrial and digital infrastructure projects.

Forecasts indicate that the full-year totals will reflect this slowdown. FMI—a consulting and investment banking firm specializing in engineering and construction—expects full-year 2025 nonresidential put-in-place construction to finish about 2% below 2024, followed by a further 0.5% decline in 2026. 

Manufacturing, which climbed from $75 billion in 2020 to roughly $225 billion in 2025, is expected to end the year down 4.7% compared with 2024 and decline another 3.7% in 2026.

Starts data from Dodge Construction Network highlights the sector split. For the 12 months ending in October, total construction starts rose 8%, but commercial starts climbed nearly 27% while institutional work was flat and manufacturing fell more than 16%. The increase is driven largely by billion-dollar-scale projects, not broad-based commercial improvement.

One example is Venture Global LNG’s CP2 export terminal in Cameron Parish, La., which received federal authorization in May. 

---

RELATED

Developer Venture Global Gets Federal OK to Build LNG Export Megaproject in Louisiana

---

As ENR previously reported, early construction is underway across the 1,150-acre site, which includes 36 liquefaction trains, four storage tanks, two marine berths, a 1,440-MW power plant and 90 miles of pipeline. The project, led by Worley, could cost up to $28 billion. Megaprojects like CP2 increasingly shape national-level statistics.

ABC’s October readings reinforce the divide. Contractors working in data centers report 10.9 months of backlog, compared with 8.0 months for firms not active in the segment. 

Heavy industrial backlog rose to 8.8 months, and infrastructure reached 9.8 months, among the highest in ABC’s series. Commercial and institutional backlog held at 8.5 months—a flat trend consistent with slowing demand.

Recent corporate disclosures reinforce the concentration of work in large, technically complex sectors. Turner Construction—part of Spain-based ACS Group—reported that its sales grew 43% in the first nine months of 2025 on a foreign-exchange–adjusted basis, driven primarily by data centers and biopharma projects.

Turner’s backlog rose 20% to €34.4 billion—about $37.8 billion—according to ACS filings. Across the broader ACS Group, more than half of new orders now come from digital infrastructure, energy infrastructure and defense, underscoring how a relatively small set of megaproject categories is sustaining much of today’s national construction volume.

Labor and Cost Tighten Delivery

Workforce shortages continue to frame the operating environment: Associated General Contractors’ 2025 Construction Hiring & Business Outlook survey found that around two-thirds of respondents expect shortages to persist into 2026.

Similarly, ABC estimates that the industry will need to attract an additional 500,000 workers in the coming year due to a persistent shortage of skilled labor. QBE notes that roughly one-quarter of the construction workforce is foreign-born—a larger share than the overall labor force—leaving the sector sensitive to changes in immigration enforcement and visa processing.

In practical terms, the administration's campaign to deport workers lacking proper documentation, coupled with an assessment by the National Association of Home Builders and Home Builders Institute of a looming retirement-related time bomb—more than one-fifth of U.S. construction workers are 55 or older—is further accelerating attrition rates. Those pressures are particularly evident in fast-growing states such as Texas and Florida.

Rising materials and equipment costs have added to the strain. ABC’s November update shows construction input prices up 3.5% from last September, driven by increased costs fpr electrical equipment, steel, copper and transportation; costs many economists attribute to President Trump's tariff scheme.

Manufacturers and contractors working under fixed-price contracts signed before this year’s price hikes are now facing tighter contingencies and more frequent renegotiations with owners.

Still, optimism is a buoy. Despite ABC’s Construction Confidence Index easing to 60.1 for staffing expectations, the number remains well above the 50-point threshold, indicating growth — but that indicator has moderated as firms brace for further constriction of labor markets and continued cost pressure.

Data Centers Redefine 'Commercial' Construction

Data centers are reshaping commercial construction more dramatically than any other segment. A 2024 Electric Power Research Institute study backed by the U.S. Department of Energy estimates that U.S. data centers now consume more than 4% of national electricity—a share projected to climb to as much as 12% by 2028.

Rising power demands are already affecting project timelines. Mortenson's Executive Vice President Maja Rosenquist noted that several hyperscale facilities delayed their progress even after breaking ground due to utilities' inability to meet power-delivery schedules. Additionally, increasing AI workloads are causing mid-project redesigns of cooling and electrical systems, as reported earlier by ENR. 

---

RELATED

Power Hungry: AI-Fueled Data Center Boom Sets Energy Delivery’s New Course

---

Burns & McDonnell’s data-center practice lead, Christine Wood, told ENR that hyperscale build schedules are increasingly “at odds with the pace of power and transmission infrastructure development,” calling the mismatch a “critical constraint.”

Utilities confirm the stress. In July, Dominion Energy—host to about 13% of global data-center capacity in northern Virginia—saw its power-capacity pipeline nearly double over the past year, rising from 21.4 GW to 40.2 GW. Water use is similarly significant: a large hyperscale campus can require up to 5 million gallons per day, according to the Environmental and Energy Study Institute.

These dynamics help explain why commercial starts appear strong in national data despite weakening office, retail and small-format commercial markets. They also shift risk toward interconnection timelines, regional transmission capacity, long-lead electrical equipment procurement and water availability.

While federal incentives under the Infrastructure Investment and Jobs Act, CHIPS and Science Act, and Inflation Reduction Act continue to support many of the megaprojects sustaining the market, several major funding pools are now fully committed or nearing their limits, raising concern that key programs could taper over the next 12 to 18 months even though the statutes remain in force.

If notices to proceed begin to slow faster than backlogs can be replenished, contractors could face a “funding hangover” starting in 2026. 

With ABC reporting that nearly two-thirds of contractors believe the industry is contracting—and with backlog strength concentrated in data centers, heavy industrial work, and infrastructure—the central question is not whether the overall construction market will continue to grow, but whether continuing to increase data center capacity obscures an overall weakness that shouldn't be overlooked.