United States
Australia
Austria
Belgium
Bulgaria
Canada
China
Czech Republic
Denmark
Finland
France
Germany
Greece
Group
Hong Kong SAR
Hungary
India
Ireland
Italy
Japan
Lithuania
Mexico
Netherlands
New Zealand
Norway
Poland
Romania
Singapore
Slovakia
Slovenia
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
After increasing 1.4% last year we expect global construction output to grow by 2.3% this year. Growth in advanced economies is predicted to increase by 1.5%, while building activity in emerging markets will rise by 3.1%.
Global trade issues have increased business uncertainty, leading to lower commercial construction spending in many countries. We expect non-residential construction growth to by just 1.6% this year.
Residential construction output is forecast to increase by 2.6% in 2026 and 4.0% in 2027. The impact of interest rate cutting cycles should be felt during the course of 2026. The global civil engineering sector will grow 2.5% in 2026, followed by a 3.7% increase in 2027.
Shortages of skilled construction labor and high labor costs are structural issues affecting many advanced economies. This is strongly impacting profit margins and delivery deadlines.
We expect US construction output to grow by just 1.5% year-on-year in 2026. Targeted tariffs on key construction inputs including steel, aluminium, and copper are disproportionately affecting the industry.
Targeted tariffs on key inputs like steel affect the industry in the US, and the construction labour market is tight.
The construction labor market is tight. Project costs are rising to meet higher wages, negatively affecting companies that have a lot of fixed price contracts. The current policy to curb immigration and implement more deportations is exacerbating labor shortages in the industry.
Recent interest rate cuts by the Fed are supporting construction activity but borrowing costs remain elevated for the time being. It is currently assumed that the Fed will pause before cutting interest rates again in June and September.
After a 0.4% contraction in 2025 residential construction output is expected to rebound by 2.5% in 2026. The decline in mortgage rates is driving a gradual thaw in the housing market.
Non-residential construction is expected to contract by 2.2% this year after growing 1.1% in 2025. The US trade policy continues to hamper and delay business investments in new factories or office buildings, with only the largest projects likely to proceed.
Civil engineering performance remains robust, expected to grow by 5.4% in 2026 after a 6.1% increase in 2025. The subsector benefits from ongoing infrastructure investment and large megaprojects, especially tech data centres to fund the growth in AI demand.
For the time being the US construction industry as a whole remains resilient, despite pressure on profit margins due to elevated interest, materials, and labor costs. We expect no deterioration of the sector´s credit risk in the coming six months. The sector has historically operated with long payment times compared to other industries, and this is unlikely to change.
After a 0.9% contraction in 2025 we expect Chinese construction output to rebound by 2% in 2026. Residential construction has suffered from weak sentiment and ongoing financial problems.
As significant fiscal resources are likely to be allocated to the real estate sector, residential building is expected to rebound by 2.5% this year. The government has provided mortgage rate cuts, eased restrictions on home purchase, and funded support for targeted property projects (e.g. social housing).
Fiscal stimulus aims to rebalance the economy towards advanced, high-tech manufacturing. This is driving non-residential building, which is expected to grow 3.2%.
The risk of payment delays and insolvency in construction remains above the industry average in China, especially for private contractors and real-estate developers The same goes for regional SOEs, which are highly dependent on local governments´ budgets and fiscal capacities.
India’s construction output is expected to increase by up to 4.4% in 2026 after growing 7.4% in 2025. Growth is mainly driven by government investment in infrastructure (roads and railways and industrial construction).
Despite the benign growth outlook, the sector is marred with issues. Delays, defaults and insolvencies are common due to overrunning projects. Payment delays are expected to persist, influenced by ongoing bureaucratic challenges and financial constraints.
Public and Private Partnership projects, including roads, power and airports, face higher credit risk due to their long-term nature and the reliance on government payments.
Construction demand is stable in Southeast Asia, partly driven by the major role played by government projects to improve infrastructure and energy development. 2026 construction output figures for Indonesia, the Philippines, Malaysia and Vietnam are robust (about 6% annual increase on average).
Despite robust growth, margins in Southeast Asia are under pressure from competition and commodity prices, and the industry is highly leveraged.
Despite growth, construction industry margins are under pressure from competition and commodity prices. The industry is highly leveraged, often resulting in tight covenants or banking demands for secure collateral when seeking finance.
Many markets, in particular Thailand and Vietnam, are experiencing an increase in payment delays and insolvencies, often caused by project delays and volatile materials pricing leading to liquidity shortages. In contrast, Singapore’s construction industry credit risk is low.
Construction activity across the eurozone is expected to increase by 1.6% in 2026 after growing 0.6% in 2025. Residential construction is forecast to grow 1.5% in 2026, supported by ECB interest rate cuts last year. Civil engineering output is forecast to increase 1.6% this year.
Across the EU and the UK higher material costs and a structural labour shortage negatively impact margins of builders.
Across the EU and the UK, material costs will remain higher than in the past, and labour shortages are structural. Both issues negatively impact margins of builders. Credit risk for construction businesses remains high in most European markets.
Construction activity will level off in 2026 after a 1.5% contraction last year. The industry currently lacks any major growth driver, and political uncertainty weighs on the outlook.
Activity in the residential construction subsector remains subdued this year, expected to contract by 0.1%. Non-residential output is expected to grow by just 0.3% after a 2.5% contraction in 2025. The high fiscal deficit and uncertainty over the 2026 budget hamper government investment in infrastructure.
Due to the weak performance outlook the level of protracted payments and insolvencies will remain high in the coming months.
After contractions in 2024 (-3.7%) and 2025 (-4.4%) we expect construction output to rebound modestly this year, by 1.4%. The financial leeway created by the government’s special fund will only gradually take effect.
Complex approval processes and bureaucratic hurdles weigh on the sector, along with increased prices for building materials and the ongoing shortage of skilled workers
Residential construction is forecast to grow by 1.1% in 2026 after steep contractions over the past two years. The increase in building permits in 2025 is a positive sign.
Both the civil engineering and non-residential building subsectors will be bolstered by the fiscal package. But labor shortages persist as a significant constraint. Without additional capacity, it will be difficult to implement the urgently needed infrastructure and construction projects at speed.
Credit risk remains high for the time being, in particular for small construction businesses. Payment behavior remains tense, and the level of construction insolvencies is still high.
After growing by 3.3% in 2025, construction output growth is expected to cool down to 1.1% in 2026. Producer prices remain elevated, which impacts activity.
Residential construction output will remain subdued, growing by 1.2% this year. However, rising investments in this segment indicate some recovery, although the performance will still be sluggish compared to civil engineering.
Credit risk in the industry is high due to fluctuating demand, liquidity shortages, reluctance of banks to provide loans and long protracted payments. SMEs in the residential segment are affected by high competition, pressure on margins and liquidity tensions.
Between 2023 and 2025, the insolvency rate among Italian construction companies has shown a concerning upward trend. We expect insolvency risk to remain elevated due to structural weaknesses and ongoing financial strains.
Construction output in the Netherlands is expected to rise by 2.5%, but serious issues remain. Labor shortages are a significant issue, and half of Dutch construction companies report production obstacles due to a lack of skilled workers and slow permit issuance. Profit margins are structurally low, mainly due to strong competition.
Residential construction output is accelerating, with the number of completed new homes expected to increase from 68,000 in 2025 to 80,000 in 2026 and 84,000 next year. This marks the first clear upswing for the sector in quite some time.
Pressure remains in the non residential sector, as investments fell by 8% last year, with another 7% contraction expected this year. Infrastructure, by contrast, is benefitting from energy related works.
This year construction output is forecast to increase by 1.5% in 2026. Interest rate cuts are ongoing, but from a high point and will take time to flow through to improved building activity.
Residential construction is set to increase by 3.5% this year. The government announced to build 1.5 million new homes by 2030, but there are serious doubts that this target is achievable under current market conditions.
Recent increases in National Insurance Contributions and the national living wage weigh on the profitability of UK businesses. This impacts their financial capacity to invest in buildings. Therefore, non-residential construction activity is forecast to contract by 1% in 2026.
In the UK many new building projects continue to be delayed, due to legacy contracts, supply chain issues, price inflation, and delays in planning applications being approved.
Construction insolvencies peaked in 2024, at levels only comparable to the 2008 financial crisis. In the coming months we expect some improvement of the sector’s credit risk situation, but market conditions remain challenging.
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