FMI Releases it’s Q3 2026 Engineering & Construction Outlook

Construction in 2026: A Market of Winners and Watch Lists

The U.S. construction market isn’t slowing as much as it’s shifting. FMI’s latest Q3 2026 North American Engineering and Construction Outlook forecasts total construction spending of $2.214 trillion, down just over 1% after recent Census revisions. That modest decline masks a much bigger story: some sectors are cooling while others are entering multi-year growth cycles.

Manufacturing is the largest drag on the market as spending declines 17.4% with many semiconductor and battery megaprojects moving beyond their peak construction phases. In contrast, data centers remain one of the industry’s strongest growth engines, with spending projected to increase more than 21% this year as AI and cloud infrastructure continue to drive investment. Meanwhile, the power sector is positioning for what could become its strongest expansion in decades, with supply chain constraints limiting growth today but a significant acceleration expected in 2027.

Contractors should also keep a close eye on Washington. Changes to tariff policies, the expiration of federal appropriations, and the upcoming IIJA reauthorization all have the potential to influence project timing, pricing, and owner confidence.

The takeaway is straightforward: 2026 is less about the overall market and more about where you choose to compete. Companies aligned with long-term investments in power, digital infrastructure, healthcare, and critical infrastructure are likely to find more opportunity than those relying on sectors that are returning to more normalized spending levels. Strategic market selection—not simply market growth—will be one of the biggest differentiators for construction firms over the next several years.