Labor, tariffs collide with data center boom

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Dive Transient:

• Sixty-five p.c of contractors count on the info middle building market to develop over the following 12 months, in comparison with 8% who assume it can shrink, in keeping with the Associated General Contractors of America’s 2026 construction hiring and business outlook, launched on Jan. 8.
• Contractors are additionally more and more bullish about energy initiatives, the one different sector to submit the next studying than in 2025. Exterior these two teams, companies reported weaker sentiment. 
• For instance, contractors’ outlook for transportation and infrastructure on the general public facet weakened over the previous yr, as did expectations for warehouse and multifamily initiatives within the non-public sector.

Dive Perception:

AGC’s survey on hiring and enterprise provides extra granularity to the evolving outlook for construction in 2026, notably with regards to labor. 

The uneven forecast arrives as companies count on labor challenges to linger in 2026. For instance, about 82% of companies report issue filling hourly craft positions and 80% wrestle to fill salaried roles.That has led to challenge uncertainty, with about 60% of respondents saying a challenge has been postponed or canceled throughout the previous six months.

Throughout a webinar to current the survey’s findings, panelists talked about an trade with booming demand for sure forms of builds, notably information facilities and energy initiatives that help these services. However for contractors outdoors of that growth, deep-rooted challenges are as soon as once more high of thoughts.

The share of firms struggling to fill open positions climbed to its highest stage previously three years, stated Ken Simonson, chief economist at AGC. That’s an enormous concern, coupled with the truth that seasoned execs are beginning to depart the workforce, stated Kyle Van Slyke, chief working officer at Musselman & Corridor Contractors, an Overland Park, Kansas-based building firm. 

“Our greatest problem is that this workforce,” stated Van Slyke throughout the name. “The senior management that continues to retire and never be replenished is actually hurting our market.”

Immigration enforcement has additionally begun to impression workflows on jobsites.

About 33% of companies reported being affected by immigration enforcement actions previously six months, both by staff now not exhibiting up or subcontractors shedding labor. One other 6% of companies reported cases of Immigration and Customs Enforcement officers exhibiting up at a jobsite or workplace.

Tariffs are additionally a thorn in contractors’ sides.

Roughly 70% of contractors stated tariffs affected business in 2025, per AGC’s outlook. That prompted 40% of companies to boost bid costs and about one third to speed up supplies purchases. About 35% companies handed most or all tariff-related prices to homeowners, although 11% stated they absorbed most or the entire tariff prices, in keeping with the survey.

“2026 gives a handful of clear vivid spots amid a rising variety of challenges, reflecting the blended outlook reported all through the survey,” AGC CEO Jeffrey Shoaf stated throughout the name. “Affiliation officers proceed to induce the administration and Congress to deal with building workforce shortages in each brief time period and long run measures.”