Engineering Services NAICS 541330

Sep 19, 2025 - Civil Infrastructure Backlogs Slowing

• Construction firms that work on civil infrastructure projects are holding steady as they manage uncertainties, including waning backlog growth and weaker margins, according to FMI’s third-quarter Civil Infrastructure Construction Index (CICI) survey. The CICI reading for the third quarter was 50.8 compared to 52.2 in Q2 2025 – on a 100-point scale. Any CICI reading above 50 indicates that more civil infrastructure contractors see conditions as good than poor. While about 52% of firms surveyed said their work backlogs had risen in Q3 2025 compared to a year earlier, only 25% expected backlog growth in Q4. While civil infrastructure firms expect backlogs to ease, margins remain under pressure from competitive bidding and higher costs. FMI expects firms to focus on project selection and cost controls to improve margins, as higher work volumes are a less reliable profitability boost.
• The 2025 construction outlook signals cautious optimism for the nonresidential and infrastructure segments amid selective growth and macroeconomic headwinds, according to construction software and data firm ConstructConnect. Nonresidential building starts are projected to rise 4.1% over 2024, driven by resilient megaprojects in manufacturing (+38.1%), data centers (+17.3%), and transportation terminals (+ 153.3%), though this momentum may fade by 2026 as planning slows. Institutional construction faces a 6.9% decline, with sharp contractions in prisons and healthcare facilities, while civil construction continues its upward trajectory, led by bridge (+13.5%) and airport runway (+14.7%) investments. Engineering firms will benefit from complex design and planning needs tied to these large-scale projects, especially in manufacturing and infrastructure, but must navigate volatility in tariffs, labor supply, and shifting policy priorities, particularly in power infrastructure.

• In September, consulting firm McKinsey and Co. hosted an infrastructure summit where it released a new report highlighting details of its estimated $106 trillion in global infrastructure spending through 2040, according to Engineering News-Record. A McKinsey senior partner noted that more than 100 infrastructure categories are nested under seven major sectors: transportation, water and wastewater, energy, digital, agriculture, social, and aerospace and defense. Nearly a third of all infrastructure types are relatively new, among them are those areas associated with the energy transition and meeting climate goals. Private investments, including public-private partnerships, are an increasingly significant source of project funding. However, attendees at the summit noted that infrastructure spending growth faces serious challenges, including geopolitical uncertainties, higher financing costs, and evolving US trade policy.
• The Dodge Momentum Index (DMI) increased 7.5% in August 2025 to 301.4 (2000=100), up from the downwardly revised July reading of 279.9. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component improved by 8.7%, and institutional rose by 5.4%. For the commercial sector, growth in August was led by data centers, warehouses, hotels, service stations, and parking garages. Some institutional spending slowed, including education and healthcare, but remained in positive territory. Dodge’s associate director of forecasting, Sarah Martin, suggested that after several months of uncertainty, project owners and developers are beginning to move ahead, pricing in higher tariff-related costs.