Commercial Construction Trends and Data Navigating Market Trends and Dynamics

Key Insights

Demand & Confidence

• Private commercial construction volume remained unchanged from October-November 2024 and increased by 1.7% YoY.
• The construction industry only added a net 8,000 jobs in December. Nonresidential construction accounted for 4,700 of those positions, with most belonging to specialty trade.
• Nonresidential construction unemployment rose to 5.2% in December, compared to the .1% decrease in unemployment seen across all industries.Construction job growth has slowed in the last few months, with most employees and contractors in a “wait and see” mode, according to ABC.
• The ABC Construction Backlog Indicator fell in December, but contractor confidence remains elevated.

Costs

• Construction material input costs decreased 0.2% MoM in December, but remain up 0.9% YoY.

Year-End Reflections and Predictions

• The industry showed resilience in 2024, marked by construction spending exceeding $2 trillion, record employment of 8.3 million workers in July, and strong growth indicators despite challenges from high interest rates and inflation.
• Looking ahead to 2025, the sector is expected to see moderate growth driven by anticipated interest rate cuts, continued government infrastructure investments through IIJA and CHIPS Act funding, and increased data center construction demand. However, the persistent labor shortage (averaging 382,000 monthly job openings) remains a critical challenge, pushing firms to increasingly adopt technological solutions like AI-enabled automation, digital twins, and robotics while also pursuing innovative workforce development strategies.
• The North American construction sector is projected to grow from $2.58 trillion in 2025 to $3.26 trillion by 2030, showing an average annual growth rate of 4.82% during this five-year period, according to Mordor market analysis.

Construction Material Costs

Input prices for construction materials fell by 0.2% MoM in December. Overall construction input costs are up 0.9% YoY, with nonresidential construction materials showing a 0.6% increase. Energy costs saw significant jumps across all categories in the latest month, with natural gas prices surging 57.7%, unprocessed energy materials rising 10.0%, and crude petroleum edging up 0.5%.

The cost of labor in the construction industry has increased steadily over the last few years. We saw a 1.49% increase in Q3 2024, and 3.02% YoY. We saw record employment rates in mid-2024, but this has slowed in recent months.

Based on our local data, these are the trends we’re seeing for material procurement. Most material procurement timelines have returned to more stabilized durations after significant procurement volatility and supply chain disruptions over the last couple of years. Still, many lead times are extended relative to historical norms for some specialty items, fixtures, and equipment.