Construction contractors are optimistic about certain private-sector segments and have high hopes for most types of public-sector work, according to survey results the Associated General Contractors of America and Sage released today. Yet they have very low expectations for several private-sector market segments, remain concerned about labor shortages and are worried materials prices will climb amid threats of new tariffs.
“2025 offers quite a few bright spots for the construction industry even as the outlook for some private-sector segments remains quite dire,” said Jeffrey Shoaf, the association’s chief executive officer. “Firms expect regulatory relief will help drive demand and they will continue to hire, when they can, and boost investments in technologies, particularly artificial intelligence.”
The net reading—the percentage of respondents who expect the available dollar value of projects to expand compared to the percentage who expect it to shrink—is positive for 15 of the 17 categories of construction included in the survey. The highest net reading, 42 percent, is for data centers.
Contractors are also very bullish about the prospects for water and sewer projects, with a net reading of 35 percent, and for power projects, with a net reading of 32 percent. They also are bullish about healthcare construction, with a net of 27 percent for non-hospital healthcare facilities, such as clinics, testing facilities and medical labs, and 24 percent for hospitals.
Survey respondents are largely positive as well about manufacturing plant construction, with a net reading of 25 percent. Contractors are also optimistic about the education sector with a net reading of 13 percent for kindergarten-to-12th-grade schools and 12 percent for higher education construction.
Five other segments have readings that range from moderately positive to negative. The net reading for warehouse construction is 14 percent, while the reading for multifamily residential construction is 12 percent. Contractors have a slightly positive net reading, 7 percent, for lodging. Meanwhile, the net reading for private office construction is -3 percent. And the outlook for retail projects is -5 percent.
Association officials noted that contractor expectations are high for a range of infrastructure segments. The net reading for transportation structures, such as airport and rail projects, is 29 percent. Expectations for bridge and highway work are net 24 percent positive. The reading for federal contracts, for agencies such as the General Services Administration and the U.S. Army Corps of Engineers, is 22 percent. One other public category—public buildings—drew a moderately positive net reading of 14 percent.
“One reason contractors have a relatively positive outlook for many public sector market segments is that more contractors are starting to see the effects of increased federal investments in infrastructure,” said Ken Simonson, the association’s chief economist. He noted that 18 percent of respondents say they have worked on new federally funded infrastructure projects, double the 9 percent who said that was the case a year ago.
The construction economist noted that most firms anticipate adding workers in 2025 to accommodate the higher demand for most types of projects. More than two-thirds of the respondents expect to add to their headcount, compared to only 10 percent who expect a decrease.