A new report from Deloitte, “2026 Engineering and Construction Industry Outlook,” identifies significant headwinds facing the industry in 2026, including persistent inflation, high interest rates, rising material costs, supply-chain disruptions and acute labor shortages that are tightening margins and stretching project timelines. Despite these challenges, there are bright spots—particularly strong demand tied to artificial intelligence–driven data center projects and energy infrastructure, which are helping support industry activity. Investment in structures is expected to shift from a 2025 decline to modest growth in 2026, supported by these technology-focused segments. However, talent shortages are a major constraint, with the industry needing roughly half a million new workers and facing demographic pressures as large portions of the workforce near retirement.
KEY FINDINGS FROM THE REPORT INCLUDE:
Modest industry growth forecast: After declines in 2025, investment in structures is projected to grow approximately 1.8% in 2026, led by AI-related data center and energy projects.
Tariffs and material cost pressures: Elevated tariff rates on key materials and ongoing supply disruption are raising costs and prompting more strategic procurement and contract risk management.
Digital transformation focus: Firms are increasingly deploying advanced digital tools (AI, BIM, digital twins, IoT) to improve planning, safety and project delivery amid tight labor and cost conditions.
Severe labor shortages: The industry faces a substantial workforce gap, with demand for hundreds of thousands of additional workers and an aging labor pool, pressuring timelines and productivity.
Strategic resilience and M&A: To thrive, firms need financial agility, smart capital allocation and selective mergers/acquisitions that strengthen digital and operational capabilities.
SOURCE: “2026 Engineering and Construction Industry Outlook,” Deloitte // deloitte.com/us/en/insights/industry/engineering-and-construction/engineering-and-construction-industry-outlook
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