Recent U.S. construction data shows a market that looks robust in the aggregate but is increasingly driven by a narrow set of asset types. A Cushman & Wakefield report notes that new construction starts fell 20% month over month in June, reversing part of a 33.5% gain in May that was propelled by several very large projects in healthcare, manufacturing, utilities and data centers.
That pattern highlights how a small number of large undertakings can swing industry headline numbers. Cushman & Wakefield reports that construction activity is uneven across sectors, with data centers and energy-related work underpinning much of the current growth. In contrast, residential and institutional construction remains weak, underscoring a bifurcated cycle rather than a broad-based upswing.
The monthly volatility in nonresidential and infrastructure starts reinforces that point. In May, nonresidential building starts increased 17.8% and nonbuilding starts climbed 91.9%. By June, those same categories fell 9.1% and 37.7%, respectively. The data suggests that timing and scale of large projects now have outsized influence on reported performance.
Backlog figures tell a similar story of divergence. Citing Associated Builders and Contractors data, Cushman & Wakefield notes that commercial and institutional project backlogs stood at 8.9 months in June, while infrastructure work had a 10.1-month backlog, up 7.9% from a year earlier. Data center projects show even greater depth, with an 11-month backlog compared with 8.5 months for projects without data center exposure, illustrating the sector’s disproportionate pull on contractor pipelines.
Forward indicators are softer. The American Institute of Architects’ Commercial/Industrial Architectural Billings Index, which leads nonresidential construction by up to 12 months, registered 46.7 in June, below the breakeven level of 50 and under that threshold in nine of the past ten months. Cushman & Wakefield expects related activity to remain soft into early 2027, adding that the outlook is highly sensitive to interest rate cuts and trade policy.
Construction executives also appear to view the market as divided. ENR’s Construction Industry Confidence Index held at 54 in the second quarter, signaling slight optimism, but respondents continue to characterize overall conditions as fragile, with strength concentrated in data centers and energy. Cushman & Wakefield anticipates sentiment will likely stay neutral to slightly positive until either costs moderate or interest rates move lower.
Labor metrics underscore the selective nature of current demand. Construction employment reached 8.322 million in the second quarter, up 0.6% year over year and near record highs. JOLTS data shows job openings, hirings and quits all rising month over month, by 4.8%, 14.5% and 19.2%, respectively. Even so, the report concludes that a relatively narrow set of segments is absorbing labor demand, rather than a broad-based squeeze across the industry.
The labor outlook calls for further employment gains through the third quarter, followed by contraction as a thinning project pipeline in several traditional nonresidential segments weighs on demand. Taken together, the data suggests that headline construction strength is increasingly determined by what is being built and the specific niches in which contractors, developers and investors operate.
