The report cites Engineering News-Record’s materials index which says prices have risen 5.3% in the 12 months ending in May 2026, driven at least in part by tariffs.
The blockage of the Strait of Hormuz is pushing energy costs up by choking off 20% of global oil supplies.
Despite this, the US construction labour market has remained relatively stable, with employment increasing by 50,000 jobs year-on-year, the equivalent of 0.6%. Non-residential employment rose by 20% driven mostly by data centre spending.
GCR spoke with Steve Stouthamer, Skanska USA’s executive vice president of project planning, about the sector.
Sectors have been described as “uneven” in the report, what’s driving this disparity?
Different factors affect the sectors. Commercial development such as office and residential are hurt by interest rates remaining high, a weak divestment market and ROI impaired by construction costs.
Education spending is affected by bond sales and bond ratings, assessment of needs and public policies that can affect funding.
Booming technology sector work such as data centres, semi-conductor manufacturing and even life sciences are driven by demand and arguably more by speed to market than cost. Because of these variables, sectors are uneven at present.
Have tariffs increased materials prices in the last 12 months?
The Section 232 tariffs, implemented under the guise of national security and which specifically affect metals like steel, aluminium and copper, have driven prices up and, most recently, products that use these metals.
We have been fortunate in the US to not see supply chains disrupted by global uncertainties, in particular the war in Iran
Steve Stouthamer, Skanska USA’s executive vice president of project planningThe International Emergency Economic Powers Act tariffs – which the courts struck down – were not seen as having as big an impact on construction as the Section 232 tariffs.
Materials indices have shown recent increases that may have been anticipated earlier in the tariff enactments, but supply chains have worked to adjust to offer the best possible pricing.
It seems more recently that manufacturers are having to pass on tariff price hikes, which is reflected in published indices.
The future is difficult to predict. High tech markets have seemingly absorbed price increases, thus helping to sustain commercial construction spending.
If those markets continue their current growth and material demands remain as we have seen in the past two years, it’s difficult to predict that material costs will not continue to climb.
How has the supply chain been affected by broader economic uncertainty, wars and energy volatility?
We have been fortunate in the US to not see supply chains disrupted by global uncertainties, in particular the war in Iran.
We’ve seen cost escalation in fuels and operations that require fuels, like shipping.
Other regions that rely on products from the Middle East have felt some supply chain disruption, but the US supply chain is stable, albeit with extended lead times on major equipment such as electrical and mechanical equipment for buildings, thanks to the high tech boom.
Are the 50,000 new jobs down to data centres?
It’s mainly driven by data centre construction, with its big demand for specialty trade contractors.
There are also very significant investments in drug manufacturing, facilities and other stalwart markets like education.
While indices show some stability in labour, some regions are feeling the pinch from the high-tech market where workers are offered premiums. It’s leaving some projects without adequate subcontractor interest due to labour constraints. It’s certainly an opportunistic market in some regions of the country.
Conversely, employment numbers in residential construction have dropped by roughly 1.5% in the last 12 months, according to trade bodies.
How are different US regions faring?
The West and Pacific Northwest may feel the decline in commercial development the most, but other sectors are growing and there is stability.
The Northeast has had its ups and downs. Boston’s focus on electrification and other factors give it a moderate growth trajectory just now. But, as the report notes, big pools of capital remain on the sidelines because of high interest rates. Political discord, nationally and locally, is increasing timing and entitlement risk.
The greater metro New York region and into Philadelphia are not data centre markets but there are significant life science and public infrastructure investments. Other sectors like healthcare and education continue to offer opportunities.
Across the Mid-Atlantic and Southeast and Central states, data centres are clearly driving construction and will do so for a while.
That said, other sectors such as public projects, education and healthcare continue to grow.
Tell us about the Project Stress Index (PSI).
The PSI tracks delayed bid dates, on-hold projects and abandonments in pre-construction.
Since our report was published, the PSI has dropped from 104.6 in March to 90.2 in May and appears to be on an overall downward trend since early 2026.
The readings reflect conditions across market types and spikes can be attributed to decreased
demand in various markets, economic and geopolitical uncertainty, higher interest rates and funding constraints, permitting delays and labour unavailability.
Early contractor involvement can help reduce the risk of projects being delayed, put on hold, or
abandoned with transparent pricing, value engineering options, reliable schedules and offsite techniques.
At the macroeconomic level, the PSI will likely drop with a stabilised economic and geopolitical environment, interest rate reductions, and restored funding, but these are levers general contractors and customers don’t control.
How is the industry using AI, how will this affect labour?
AI agents are seeing increasing usage by industry professionals to improve task quality and turnaround times.
AI agents are showing rapid development in their ability to answer and deliver solutions to more complex needs and we expect this will continue to improve industry productivity in the months and years ahead.
What advice would you offer a major developer to reduce project risk?
I can offer three suggestions.
I am unsure that prices will recede. The industry as a whole has very little history of price
declination other than in the short term. So, I would recommend beginning projects as soon as you are able.
Evaluate your schedules early including the major materials and equipment needed. Partner with your design team, engineers and your general contractor to procure long-lead items and avoid a significant scheduling delays.
Build contingencies for market conditions, such as scheduling, labour challenges, material escalation and tariff impacts. While we all want the cost of the projects to be the lowest they can possibly be, it’s appropriate to plan for most likely situations.
Looking ahead, what factors do you believe will have the greatest affect on the US construction market?
While there are a few, the two that come to mind are the sustainability of data centre construction and the factors that affect it, like public sentiment, power availability and AI growth.
The second is interest rates and the ability of privately financed projects to proceed as they did before covid.
Skanska’s Spring 2026 Construction Market Trends Report is available to view here.Heads up: Skanska on where we’re at with tariffs, war and the data centre boom Global Construction Review.
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