Construction’s Economy: What the Numbers Mean for the Carolinas

The construction industry continues to grow, but a closer examination of the latest economic indicators reveals an increasingly divided market. While data center development is generating extraordinary demand for construction services, much of the broader industry is experiencing slower growth, tightening margins, and renewed uncertainty.

For construction companies operating in North Carolina and South Carolina, the implications are significant. Both states benefit from population growth, industrial investment, infrastructure development, and expanding technology markets. However, the national trends emerging in October suggest that success in 2027 will depend less on overall market momentum and more on where contractors compete, how they manage costs, and their ability to secure skilled labor.

Data Centers Are Reshaping Construction Demand

According to the Construction Executive October 2026 Economic Overview, nonresidential construction spending increased for the fifth consecutive month in August. However, much of that growth was attributable to data center construction.

Data center-related spending increased 7.5% during August and more than 70% over the preceding twelve months. Since March, spending has expanded at an annualized rate of approximately 149%.

This extraordinary growth is particularly relevant to the Carolinas.

North Carolina has emerged as an important market for technology infrastructure, with data center activity concentrated around established technology corridors and locations offering access to power, land, and fiber connectivity. South Carolina’s growing industrial base and expanding electrical infrastructure also create opportunities associated with technology-intensive development.

For electrical contractors, mechanical contractors, engineering firms, and specialty trade businesses, these projects represent substantial opportunities. However, they also intensify competition for labor, equipment, and electrical infrastructure capacity.

A Chaotic Economy

The Carolinas’ relative economic strength provides an important counterpoint to the uneven national construction outlook. In his September 18, 2026, GroundBreak Carolinas article, “Taking a Hard Look at the Chaotic Fall Economy,” Bruce Yandle, Alumni Distinguished Professor of Economics Emeritus at Clemson University, highlights how regional economic performance continues to diverge despite broader national uncertainty.

Yandle points to strong population and employment growth across the Southeast, with North Carolina and South Carolina among the nation’s leading growth states. Notably, South Carolina was one of only eight states to experience manufacturing employment growth during the period examined. However, Yandle also cautions that inflation, rising construction material costs, and unpredictable federal policies present significant challenges. His analysis reinforces an important conclusion for Carolinas construction leaders: Geographic advantages create opportunity, but adaptability and disciplined management will determine which companies capitalize on it.

Material Costs Are Creating New Challenges

The latest construction input price data provides another warning signal.

Construction input prices increased 2.2% in September and were 11.2% higher than a year earlier. While energy costs contributed significantly, tariff-sensitive materials, including steel and copper wire and cable, continued experiencing price pressure.

For Carolinas contractors, these increases affect everything from industrial facilities and commercial buildings to healthcare projects and infrastructure improvements.

Electrical-intensive projects are particularly vulnerable because of their dependence on copper, switchgear, transformers, and other equipment subject to supply chain constraints.

Contractors increasingly need to revisit procurement strategies, escalation provisions, contingency allowances, and project schedules. Owners, meanwhile, may find that projects considered financially viable earlier in the year require additional investment or scope adjustments.

Workforce Demand Is Becoming More Specialized

Construction employment increased for the seventh consecutive month in September, but hiring was concentrated among nonresidential specialty trade contractors.

Demand for electricians and other skilled trades associated with data center development remains especially strong.

This presents a challenge for the Carolinas, where contractors are already competing for workers across manufacturing, infrastructure, institutional, and commercial construction.

Major projects in markets such as Charlotte, Raleigh-Durham, Greenville-Spartanburg, and Charleston can create significant regional labor demands.

The result is an increasingly competitive workforce environment in which contractors must balance recruiting, retention, training, and productivity improvements.

Backlog Growth Doesn’t Guarantee Profitability

Associated Builders and Contractors reported that its Construction Backlog Indicator increased to 8.7 months in September.

However, the difference between contractors participating in data center construction and those outside the sector is striking.

Contractors with data center work reported 11.3 months of backlog, compared with 8.3 months for contractors without such projects.

At the same time, more than one-quarter of contractors anticipate declining profit margins during the next six months.

This illustrates an important distinction: A growing backlog does not necessarily translate into stronger financial performance.

For Carolinas construction executives, disciplined estimating, project selection, workforce planning, and risk management remain essential.

Looking Ahead: A More Selective Market in 2027

The Carolinas remain attractive construction markets, supported by population growth, advanced manufacturing, infrastructure investment, and technology development.

However, the latest economic indicators suggest that industry growth is becoming increasingly concentrated.

Contractors serving data centers, electrical infrastructure, advanced manufacturing, and other specialized markets may experience strong demand. Companies dependent on more traditional commercial construction could face greater competition and increasing pressure on margins.

The strategic challenge is not simply identifying where construction spending is growing. It is determining which opportunities offer sustainable profitability.

The takeaway for Carolinas construction leaders is straightforward: Market growth creates opportunity, but disciplined execution determines who benefits.

As the industry approaches 2027, understanding the difference will become increasingly important.

Sources: Associated Builders and Contractors, U.S. Census Bureau, U.S. Bureau of Labor Statistics, and October 2026 Economic Overview.