Construction 2026 Outlook
After a year of cautious growth in 2025, the construction industry is positioning itself for higher output in 2026. While last year was shaped by economic pressure and restrained private investment, the outlook ahead is more optimistic, with sectors expected to drive recharged momentum across the industry.
This year looks set to be one of recalibration and opportunity, particularly for businesses prepared to adapt to changing demand and workforce pressures.
A Look Back at 2025
Despite ongoing economic challenges, construction output grew by approximately 1.1% in 2025. Much of this growth was driven by public sector infrastructure projects and energy transition schemes, which continued to provide stability while private development slowed.
One of the standout trends was the rapid expansion of data centres. Increased demand for cloud services and digital infrastructure led to significant investment in data centre developments across the UK, creating consistent demand for specialist trades and engineering expertise.
What to Expect in Construction 2026
Looking ahead, this year is expected to deliver stronger and more consistent growth, particularly across infrastructure, energy, utilities and digitally driven projects. Projections suggest that the outputs from the construction industry will grow by 2.8% in 2026, with public investment remaining a key driver, alongside transport, water, power, and renewable energy schemes continuing to move forward at a pace.
Private sector confidence is also expected to improve as borrowing conditions ease, market confidence grows, and delayed projects begin to restart. Residential development is likely to remain mixed, but commercial, industrial and logistics projects are expected to show renewed activity, particularly where demand is underpinned by technology and sustainability requirements.
Labour availability will continue to be one of the biggest challenges facing the industry. Skills shortages across key trades and technical roles are unlikely to ease, meaning recruitment, retention and workforce planning with a scalable approach will be critical for businesses looking to capitalise on increased workloads.
Technology will continue to play an increasingly larger role in how projects are delivered. Greater use of digital planning tools, off-site construction methods and data-driven decision making is helping firms improve efficiency, reduce risk and protect margins in an increasingly competitive market.
Where the Opportunities Are
Infrastructure and public sector work are expected to remain the most resilient areas of the market in 2026. Energy transition projects, including renewables and grid upgrades, will continue to generate long-term demand, while data centres and digital infrastructure remain a key growth area.
For contractors and recruiters alike, businesses that can supply skilled labour quickly, embrace modern delivery methods and adapt to evolving client expectations will be best placed to benefit from the upturn.
Final Thoughts
While 2026 won’t be without its challenges, the overall outlook for the construction industry is far more positive than the year before. Growth may not be explosive, but it is expected to be steady, strategic and driven by sectors with long-term investment behind them.
For those prepared to plan ahead, invest in the right people with the right companies, and remain flexible, 2026 presents a real opportunity to build and capitalise on significant growth opportunities.
