U.S. contractors face rising costs and labor shortages in 2026 outlook

A new survey of U.S. contractors highlights growing concerns over rising costs, labour shortages and shifting policies. While many remain optimistic about their own businesses, broader industry challenges are forcing firms to rethink their strategies for 2026. The survey reveals that 91% of contractors face higher costs due to tariffs, while the same percentage anticipate negative effects from upcoming policy changes. Inflation is another key worry, with 84% expecting it to shrink construction volumes next year.

Skilled labour shortages continue to disrupt schedules, affecting 65% of respondents. At the same time, aggressive pricing competition is a major hurdle for 84% of firms, pushing them to adopt more selective bidding practices. Despite these pressures, 74% of contractors feel confident about their company’s performance in 2026. Many are now focusing on margin-focused growth rather than chasing volume. Meanwhile, awareness of AI tools remains low—only about one-third recognise their potential. Yet those who have adopted them report efficiency gains of 50% to 100% in construction processes.

The findings suggest a cautious but adaptive industry. Firms are adjusting to cost pressures and labour gaps while slowly exploring new technologies. Optimism persists, but success in 2026 may depend on smarter bidding and better use of tools like AI.