As the U.S. construction landscape prepares for a potential turnaround, recent insights from UBS and Goldman Sachs offer a glimpse into the future of the industry.
The forecast suggests that while non-residential construction may experience difficulties in the near term, a robust rebound is on the horizon, particularly starting in 2026.
This anticipated resurgence is underscored by significant investments in data infrastructure, energy projects, and public sector initiatives.
According to UBS analysts, including Steven Fisher and Amit Mehrotra, the construction sector is expected to remain subdued through the latter half of 2025, with nominal growth projected at just 0.8% and real growth anticipated to decline by 3%.
This stagnation can largely be traced back to a slowdown in manufacturing project starts and ongoing challenges in commercial construction, particularly in retail and office spaces.
Fisher highlighted that “more slowing before reacceleration in 2026” is on the agenda, indicating that while the current circumstances may seem bleak, they are merely a prelude to a stronger performance in the coming years.
The analysts pinpoint several structural factors that will likely drive the next phase of growth, including heightened spending on manufacturing, data centers, and telecom infrastructure.
The potential for tax incentives and bonus depreciation could also provide a much-needed boost. Furthermore, the anticipated influx of stimulus funds is expected to contribute to spending growth between 2025 and 2026, painting a promising picture for the industry.
The economic backdrop reveals that state finances are currently stable, positioning them well for modest growth in public sector projects.
However, the looming specter of high interest rates continues to cast a shadow over housing and developer-led construction, potentially stymying progress in these areas for the foreseeable future.
Goldman Sachs has echoed these sentiments, anticipating upward pressure on used machinery prices as construction activity is expected to surge.
Their analysts have noted a tightening of used equipment inventories, which will likely lead to price increases in the next six to nine months.
This correlation aligns well with the UBS forecast, suggesting that the market is on the brink of a construction renaissance.
Interestingly, the anticipated construction boom is closely tied to the political climate, particularly the Trump administration’s commitment to infrastructure and energy projects.
Trump has reportedly secured a staggering $1.8 trillion in investments from major corporations, with numerous projects either shovel-ready or poised to commence soon.
This monumental pipeline is set to generate significant construction tailwinds in the upcoming year.
A senior executive from an asset management firm involved in a major data center project in Texas characterized the projected pace of construction during what could be Trump’s second term as a “sprint.”
This characterization reflects a broader expectation that the market will increasingly rely on large-scale projects to drive growth in 2025 and 2026.
However, despite the optimistic projections, industry experts caution that a lag may occur before the full impact of these developments is felt.
The potential reacceleration of construction spending, expected to kick off in the second half of 2026, will likely be driven by advancements in power generation, data center expansion, infrastructure development, and semiconductor manufacturing.
The implications of this forecast are far-reaching, not only for the construction industry but also for the broader economy.
The anticipated growth in construction spending could foster job creation and stimulate ancillary sectors, creating a ripple effect throughout the economy.
As construction projects ramp up, the demand for used machinery will inevitably rise, impacting equipment suppliers and manufacturers alike.
In conclusion, while the immediate future of U.S. non-residential construction may appear challenging, the seeds of growth are being sown for a potential boom in 2026.
With substantial investments, structural changes, and a favorable political landscape, the construction industry is gearing up for what could be an unprecedented period of expansion.
As stakeholders navigate the complexities of the current market, all eyes will be on the developments that will shape the construction landscape in the years to come.
