Construction industry data and comments from contractors indicate that, despite a variety of ongoing challenges and market uncertainty, contractors’ businesses and optimism remain steady, though some indicate they are concerned.
In a recent Equipment World reader poll, contractors forecasting revenue increases in 2025 pointed to greater workloads than this time last year, as well as strong infrastructure investments. Other driving factors mentioned included having a more experienced crew than last year and positive impacts from President Donald Trump's policies.
Among contractors forecasting their revenue will be down this year compared to 2024, some reasons given included needing additional workers, general uncertainty in the market and rising costs.
Mike Engstrom, owner of Engstrom Excavating in Scandia, Minnesota, told Equipment World he’s forecasting his 2025 revenue to be up 6-10% year-over-year, driven by a strong public-sector backlog. However, he adds that spending on housing projects in his area has pulled back.
One New York contractor expects his 2025 revenue to be down 6-10% year-over-year and pointed to rising material costs as a major factor, particularly gravel and lumber. This same contractor, who asked not to be identified, said any positive impact for the Trump administration’s policies had been slow to materialize so far, but he believes in the general direction of the changes. “You can't flip a light switch and [have] things change immediately.”
Derek Rachel, project manager at Rachel Contracting in Maple Lake, Minnesota, expects this year’s revenue will be roughly the same as last year's, due in part to a slowdown in commercial construction because of high interest rates. However, he says public-works spending in his area remains strong.
The biggest impact from the Trump’s administration so far, he says, has been from tariffs.
“I know a couple public works, the public jobs, they have a tariff clause in there asking more or less how much this [tariffs] is going to affect you,” says Rachel. “And they are asking almost for the dollar amount or percentage of how much it's going to affect it moving forward.”
What Does the Data Say?
Analysis from key industry groups reveals mostly positive trends, with backlogs and starts remaining strong even as material prices continue to climb.
The amount of work contractors bring in has remained relatively solid. The Associated Builders and Contractors’ Construction Backlog Indicator rose to 8.7 months in June, up 0.3 months year-over-year. The latest data, which is generated from ABC member surveys, shows backlogs are strongest in the infrastructure market at 9.3 months, followed by commercial and institutional at 8.9 months and heavy industrial at 6.8 months.
At the same time, rising material prices and uncertainty surrounding tariffs have continued to negatively impact contractors. The July update to the Associated General Contractors’ producer price index found the cost of materials and services in nonresidential construction were up 0.2% in June compared to May and up 2.3% year-over-year.
“Rising construction costs and economic uncertainty are already causing some owners to put projects on hold, which will only get worse if costs jump again,” said Ken Simonson, AGC’s chief economist.
Construction starts remain a positive indicator as well. Dodge Construction Network reported nonresidential building starts improved by 39% month-over-month in June and, year-to-date, nonresidential starts are up 6% year-over-year. Total construction starts were up 16%.
However, even though there’s a steady flow of work, associate director of forecasting at Dodge Construction Network Sarah Martin said the second half of the year remains uncertain.
“Construction starts saw solid growth in June, alongside particular strength in manufacturing and data center construction,” said Martin. “However, risks remain elevated that construction starts will be more subdued in the back half of the year – alongside ongoing uncertainty over trade policy and the broader economy.”
