Structural Steel and Precast Concrete Contractors NAICS 238120

Nov 7, 2025 - Nonresidential Construction Conditions Weaken

• During a webinar in October, Associated Builders and Contractors (ABC) chief economist Anirban Basu warned of tightening conditions for the U.S. construction industry, with rising interest rates, material costs, and financing challenges threatening project viability, according to Construction Dive. While data center construction remains strong, driven by investments in AI infrastructure, other sectors, such as commercial, manufacturing, and public infrastructure, are cooling due to tariffs, saturated markets, and dwindling government funding. Contractors outside the data center space report shrinking backlogs and reduced deal flow. The expiration of federal infrastructure funding in 2026 may further dampen demand.
• North American construction and engineering spending in 2026 is expected to rise 1% after decreasing an estimated 1% in 2025, according to FMI’s fourth-quarter 2025 North American Engineering and Construction Outlook. Commercial construction spending is forecast to decline by 4% in 2026 as retail store closures surpass openings for the first time in a decade and warehouse vacancies remain high. Lodging construction is expected to decline by 2% in 2026, amid sluggish business travel growth and as financing conditions and maturing debt pose headwinds. Even as vacancy rates remain high, office construction spending growth will rise 7% in 2026, driven by data centers and converting offices to multifamily. Federal funding cuts are projected to result in flat educational construction spending in 2026, while healthcare projects are expected to see a 3% increase.

• Demand for building design services fell in September from the prior month, according to an October report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) dropped to 43.3 compared to August’s reading of 47.2. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries dropped to 50.1 in September from 50.3 in August, and the index for the value of new design contracts decreased from 47.2 to 46.3. September marked the 19th consecutive month of decline for new design contracts. The AIA’s Chief Economist, Kermit Baker said, "Unfortunately, business conditions remain relatively weak at architecture firms. There was some erosion in project backlogs this past quarter, with the greatest slippage coming from firms with an institutional specialization."
• The Associated Builders and Contractors (ABC) Construction Backlog Indicator was unchanged at 8.5 months in September compared to August. On a year-over-year basis, September backlogs were down 0.1%. The infrastructure backlog decreased by 1.7 months in September to 9.5 months from August but was up 1.6 months compared to September 2024. September's commercial and institutional construction backlog rose 0.2 months over August to 8.5 months but declined 0.4% from a year earlier. The heavy industrial backlog fell by 3.4 months to 7.6 months in September compared to August and was down 1.3 months year-over-year. The ABC’s Construction Confidence Index for sales fell to 59.6 in September from 60.4 in August. A Confidence Index sales reading of 50 or more indicates most contractors are optimistic about sales. ABC Chief Economist Anirban Basu said, “Falling industrywide employment, a dearth of job openings and ongoing decreases in construction spending have not diminished ABC contractor member backlog or confidence. This stability primarily stems from two sources. First, public sector activity has held up far better than its private counterpart, and that is supporting elevated backlog in the infrastructure category. The second source of industry momentum is, unsurprisingly, data centers."