On the Rise
Construction Employment Increases While Tariff Uncertainties Persist
by the Associated General Contractors of America
Construction employment increased by 33,000 jobs in January, with gains concentrated in nonresidential construction, according to an analysis of new government data released today by the Associated General Contractors of America. While January hiring was stronger than expected, contractors remain cautious about prospects for sustained growth in 2026.
“It’s encouraging to see solid construction job gains in January after a year of uneven employment,” said Ken Simonson, the association’s Chief Economist. “But those gains will fade later this year unless policymakers provide greater clarity and stability for infrastructure and energy investment.”
Total construction employment reached 8,308,000 in January, seasonally adjusted, an increase of 33,000 from December. Over the past 12 months, the industry has added 44,000 jobs, a gain of 0.5%, outpacing the 0.2% increase in total nonfarm payroll employment.
Nearly all of January’s growth occurred in nonresidential construction, which added 27,900 jobs for the month. Within that category, nonresidential specialty trade contractors led hiring with an increase of 25,100 positions, while nonresidential building contractors added 3,600 jobs. Employment in heavy and civil engineering construction was essentially flat, slipping by 800 positions.
Residential construction employment edged up only slightly in January, gaining 5,900 jobs. That increase was driven by residential specialty trade contractors, which added 5,600 positions, while residential building employment was essentially unchanged, adding 300 jobs. Despite the modest monthly uptick, residential employment remains below year-ago levels.
Association officials noted that January’s hiring gains could prove temporary without clearer federal direction on long-term infrastructure funding. With the current federal-aid surface transportation program set to expire in September, uncertainty over future investment is already weighing on many contractors’ hiring and bidding decisions.
“Contractors need confidence that infrastructure programs will remain stable and predictable before they can expand payrolls and commit to new projects,” said Jeffrey D. Shoaf, the association’s Chief Executive Officer. “To sustain construction employment, it is critical that Congress and the administration move quickly to enact a new surface transportation bill and provide the long-term funding certainty our industry depends on.”
The producer price index for materials and services used in nonresidential construction rose 2.9% from January 2025 to last month, while construction spending slipped 0.4% from December 2024 to December 2025, according to an analysis by the Associated General Contractors of America of two government reports issued today. Association officials said that tariffs are inflating the cost of key materials and urged federal officials to quickly renew key infrastructure measures like the surface transportation bill to give domestic suppliers the certainty they need to boost production.
“Although producer indexes are based on selling prices of domestic producers, the steep tariffs on imported metals and products are clearly enabling United States sellers to push up costs for construction materials and equipment,” said Simonson. “Providing domestic producers with greater certainty about future demand should encourage greater production and, ultimately, lower prices.”
The producer price indexes for aluminum mill shapes and steel mill products rocketed up by 33.0% and 20.7%, respectively from January 2025 to January 2026, the largest year-over-year increases since the supply-chain disruptions of early 2022. Simonson noted that both indexes have been accelerating every month since the president imposed a 50% tariff last June. The index for copper and brass mill shapes climbed 15.7% year-over-year in January.
A separate government report showed mixed patterns for construction spending in 2025. The total slipped 0.4% from December 2024 to December 2025. Public construction increased 3.4% although the largest segment, highway and street construction, rose only 0.8%. Private nonresidential spending declined 1.8%, dragged down by an 11.4% plunge in the largest subcategory, manufacturing construction. Private residential spending fell 1.3%, with a 3.6% decline in single-family construction offsetting a 2.9% increase in multifamily spending.
Association officials noted that it will be hard for domestic producers to raise capacity for certain key products unless they have more certainty about future demand. That is one reason why the association recently launched a new national campaign to urge Congress to pass a new surface transportation bill before the current legislation expires at the end of September. “It will be hard for suppliers to boost production if they have no idea about future demand for their products,” said Shoaf. “Passing the surface transportation bill on time will give domestic suppliers the certainty they need to boost production and offset the impacts of tariffs.”
