Community Chat: Contractors still optimistic, but less so than a year ago

In short, the construction market is a land of contrasts.

On April 15, Ken Simonson, chief economist for The Associated General Contractors of America (AGC), joined Steel Market Update and Aluminum Market Update for a Community Chat webinar to discuss the latest on the sector. AGC is the leading construction trade association with over 28,000 member companies.

Job trends

Between January 2025 and January 2026, 38 states added workers, while 11 states shed labor — primarily on the West Cost and intermountain West.

And while total non-farm payroll has slowed, total construction jobs have generally trended above that. However, the trend lines diverge when it comes to non-residential and residential construction, with residential lagging.

“Residential has been shedding employees on a year-over-year basis since early last year, whereas non-residential firms, that would be general contractors, non-residential specialty trade contractors, and heavy and civil engineering firms, still adding workers at a hefty clip,” Simonson said.

Jolting employment

Data from the Job Openings and Labor Turnover Survey, or JOLTS, shows hiring and job openings trailing off between February 2025 and February 2026. Hires were 3.3% of the workforce. Layoffs have leveled off.

“Together, these suggest that contractors aren’t hiring right now. They’re not even advertising jobs, so clearly work has tapered off,” Simonson said. “But layoffs as a percent of workforce was only 1.8% in February of this year.”

Simonson said this indicates that while firms may not be adding to their payroll, they are hanging on to the workers they have.

“Evidently, they expect to need those workers in the medium to longer term,” he said.

Survey says

According to AGC’s survey, respondents are generally optimistic about growth from power builds and data centers — about 65% of respondents said they expect the data center work to expand. But respondents were pessimistic about growth in five categories in particular: K-12 schools, higher education, lodging, private office and retail.

“A year before, there were only two negative categories — private office and retail — and the sentiment turned much more sour this year about those, as well as adding three for which the sentiment was negative.”

Concerns

About 62% of respondents said they are worried about an economic slowdown or recession.

“That was a huge jump from the year before, and it certainly fits with their expectations of less work available to bid on,” Simonson said.

“We also had a substantial minority, 44%, saying they worry about increased competition for projects,” he added. “That fits, since when there’s less to bid on, you expect more firms to come in from other geographic markets, or end markets, or to bid on smaller projects than they would have.”

Immigration

About one-third of firms said last November or December that they had been affected either directly or indirectly by immigration enforcement actions. Only 6% had been visited directly on a job site or off-site, such as their office, Simonson said.

But 11% said workers had left or failed to appear because of Immigration and Customs Enforcement. About one-quarter said their subcontractors had lost workers.

Simonson said he expects this problem is likely to grow.

“Construction trades rely very heavily on immigrants compared to the overall private sector. Thirty-five percent of construction trades workers in 2024 were foreign-born, almost double the 18% for the entire economy,” he said.

Iran war impact

Soaring fuel prices are hurting construction firms, both in terms of their own costs and for the services they require for jobs, like deliveries, equipment, and hauling. Natural gas prices also will hit the cost of construction plastics.

Strikes on aluminum facilities across Gulf Cooperation Council countries have meant curtailed production. And little traffic has traversed the Strait of Hormuz.

“The reduction in supply or shipping of aluminum ingredients has already sent aluminum prices soaring and may mean that there are shortages later this year,” Simonson said.

“All of this makes owners more hesitant to go ahead with projects, delay them, or even cancel them.”

And another impact. Middle East tycoons and sovereign wealth funds have been investing in US projects. It’s unclear how the war will affect those plans.