US Construction Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 801,704 construction sector establishments are involved in the clearing and preparation of land; building of structures and infrastructure; installation of mechanical systems, nonstructural components and finishings; and the remodeling and expansion of existing structures. The sector is segmented into construction of buildings (residential and nonresidential), heavy and civil engineering, and specialty trades.
Dependence on the Economy and Market
Demand for construction is highly dependent on economic health and can vary considerably across markets.
Seasonal and Weather-Related Factors
Seasonality and weather conditions affect project timelines and contractors’ ability to perform work.
Industry size & Structure
The construction sector is comprised of 801,704 establishments that employ 8 million workers and generate $3 trillion in annual revenue, according to government sources.
- The construction sector represents 4% of the nation's Gross Domestic Product (GDP) and employs 5% of the country's workers.
- The specialty trade contracting segment is highly fragmented: the 50 largest specialty trade firms represent 7% of segment revenue. The 50 largest building construction firms represent 20% of segment revenue; the 50 largest heavy and civil works firms represent 26% of segment revenue.
- The construction sector has a high volume of independent contractors with no employees. The number of nonemployer establishments is about 837,826 in building construction, 38,909 in heavy and civil works, and 1.8 million in specialty contracting. The owner of nonemployer establishments typically performs the work or subcontracts labor for large or complex jobs.
- The construction sector shed 78,000 establishments in 2021, which equals about 8.5% of existing establishments, according to the Bureau of Labor Statistics. However, the industry added 98,000 new establishments, which is equivalent to 10.7% of existing establishments. As a result, the construction sector has an average growth rate of 2.2%.
- The construction sector is forecast to grow its employment base by 4.7% overall in 2023-2033, which is higher than the national average of 4% for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Construction Sector Industry Growth
Recent Developments
Mar 3, 2025 - Immigration Crackdown May Increase Absenteeism
- Raids by Immigration and Customs Enforcement (ICE) are prompting some foreign-born workers to stay home from their workplaces, disrupting key industries that rely on migrant workforces, including construction, according to The Wall Street Journal. The Trump administration has said that while it is focusing on undocumented people with criminal backgrounds, anyone in the country illegally faces increased risk. According to an analysis of US Census Bureau data by the American Immigration Council, undocumented immigrants make up about 14% of the US construction sector’s workforce. The Associated General Contractors of America said it had received anecdotal reports of rising absenteeism from member firms in several locations, including Florida, Georgia, Oklahoma, and Texas. Labor disruptions reduce construction firms’ ability to deliver projects on time.
- Multifamily developers’ outlook has improved over the past year, but several challenges persist, including high interest rates and supply chain issues, according to the National Association of Home Builders’ (NAHB) Multifamily Market Survey for Q4 2024. The Multifamily Production Index (MPI) rose seven points in Q4 2024 to 48 compared to the fourth quarter of 2023. The Multifamily Occupancy Index rose four points to 81 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. The NAHB expects the multifamily construction sector to remain weak in the first half of 2025, but gain steam toward the end of the year, supported by a strong labor market.
- Soon after taking office, President Trump issued an executive order called “Unleashing American Energy” that included an order to pause and review funding processes that some legal experts suggest will likely have ramifications for the Biden-era Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), according to Construction Dive. Many stakeholders found the order's wording unclear, prompting the Office of Management and Budget to issue a memo limiting the funding pause to programs the original order termed as part of the “Green New Deal.” Even with the clarifying memo, experts suggest the order could stop obligated funding for infrastructure projects that are already underway. The order is expected to face legal challenges. At the end of 2024, about $294 billion in funding authorized under the IIJA remained unspent.
- North American construction and engineering spending in 2025 is expected to grow by 2% after increasing an estimated 6% in 2024, according to FMI’s first-quarter 2025 North American Engineering and Construction Outlook. With growth of 19%, the data center sub-sector will lead 2025 nonresidential building construction, followed by public safety (9%), amusement and recreation (7%), and manufacturing (6%). Commercial construction spending is expected to decline 9% in 2025 amid a 6% drop in warehouse demand, which accounts for more than half of annual commercial spending. Lodging construction spending is forecast to fall 7%, and stubbornly high office vacancies are expected to hold new office construction to 2% growth in 2025. Amid high mortgage interest rates and a lack of affordability, single-family construction spending is forecast to rise by 4% in 2025. A recent jump in new apartment supply and unfavorable cost conditions will reduce multifamily spending by 13% in 2025. Water projects will lead infrastructure spending growth in 2025 with a rise of 9%, followed by power (7%), sewage and waste disposal (6%), highway and street (3%), and conservation and development (1%).
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