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A new quarterly report breaks down GDP, labor costs, material prices, and financing trends shaping the construction sector, and what to watch heading into 2027.
Construction companies are navigating one of the more uneven markets in recent memory. Data center and power generation spending is setting records, while housing starts and several nonresidential segments remain sluggish under the weight of high borrowing costs. Making sense of it all requires looking past the headline numbers to the trends underneath them.
That's the goal of the newest Economic Report for the Construction Industry, produced by Armada Corporate Intelligence in partnership with CICPAC and GBQ Partners. Below is a brief look at what the report covers and why it's worth a closer read.
GDP Growth Is Stronger Than It Looks
Second-quarter GDP came in at 1.5%, below the historical norm of roughly 2%. On its own, that number understates the picture. Many of the sectors that drive construction and capital investment performed well, and the Atlanta Fed's early estimate for the third quarter points to growth as high as 5.8%. That figure will likely cool as the quarter progresses, but it signals underlying strength that a single GDP print doesn't capture.
Download the Economic Report for the Construction Industry today!
Materials, Labor & Financing Remain Under Pressure
A few themes stand out across the report:
- Raw materials. The producer price index for construction materials hit a new peak, up 9% year over year, driven by tariff pressure and continued strain on copper, steel and aluminum supply.
- Labor costs. The construction employment cost index is growing faster than inflation, though the increases are uneven. High-skill trades have seen wage gains near 4%, while lower-skill positions have softened.
- Transportation. Freight capacity is tight across every mode. Flatbed trucking rates are up roughly 35% year over year before fuel surcharges, and maritime rates into the West Coast have more than doubled.
- Financing. The 10-year Treasury yield is sitting near multi-year highs, keeping mortgage and commercial borrowing rates elevated and continuing to hold back residential and rate-sensitive nonresidential projects.
A Bifurcated Market By Design
Not every project type is affected the same way. Data centers, power generation and select civil projects are moving forward largely independent of interest rates, and the report's forecast puts data center spending growth near 28% over the next three years. Advanced manufacturing, residential and several other nonresidential categories remain far more sensitive to rate movement, which is why the outlook for those segments stays cautious through the rest of 2026.
Why This Matters For Your Planning
None of these trends exist in isolation. Material costs, labor pressures and financing conditions all flow directly into how a construction business prices work, manages cash flow and plans capital projects for next year. A contractor bidding fixed-price work in a rising-materials environment faces different risk than one financing a spec build against a high bond market, and the right response depends on where a business sits in that mix.
The full report includes region-by-region construction potential rankings, housing market data, banking and credit conditions, and a detailed sector-by-sector spending forecast through 2027.
Get The Full Picture
Download the complete Economic Report for the Construction for the full data set and quarterly forecast.
Interpreting what these trends mean for your specific business, whether that's tax planning around materials and equipment purchases, cash flow forecasting, or evaluating financing options, is where the conversation gets more useful. If you'd like to talk through how this outlook applies to your company, contact GBQ's construction industry team.
