By Dr. Anirban Basu, ABC Chief Economist
The construction industry enters 2026 with virtually no momentum. The industry lost 11,000 jobs in December and added just 14,000 jobs across the entirety of 2025. Excluding pandemic-stricken 2020, that represents the worst calendar-year performance since 2011, when the construction industry was still being devastated by the aftermath of the Great Recession.
Weakness is largely concentrated on the residential side of the industry, which lost 41,000 jobs in 2025. Put simply, homebuilding has slowed from the blazing pace seen in 2022 and 2023, and the segment will continue to shed jobs as the number of units under construction falls, at least until mortgage rates decline meaningfully.
Nonresidential construction hiring held up better but still faltered toward the end of the year, with the segment losing nearly 8,000 jobs in December. Nonresidential construction spending generally declined throughout 2025, and momentum is virtually entirely confined to the data center subsegment; construction spending on data centers is up 105% over the past two years, while spending in all other nonresidential subsegments is down 6% over that span.
Despite this anemic job growth, the industrywide unemployment rate is still lower than it was one year ago. That likely reflects immigration policy, which has weighed on the size of the construction workforce. While soft labor demand has prevented that workforce contraction from putting upward pressure on wages, that would change if construction activity rebounds.
In Wisconsin, the construction industry has actually grown at a reasonably healthy pace in 2025, adding 5,100 new jobs throughout the year. That equates to a 3.1% year-over-year increase, which is significantly faster than both statewide job growth and nationwide construction job growth. This outsized expansions represents the continuation of a longer-term trend; since the end of 2019, Wisconsin’s construction employment base has grown at a much faster pace than the rest of the nation’s (17% vs. 10%, respectively).
Despite that admirable performance, Wisconsin’s construction industry will face the same macroeconomic headwinds as most other states at the start of 2026, yet there is reason to be cautiously optimistic about the latter parts of the year. Borrowing costs will likely decline by the second half of the year, especially if broader inflation remains tame, and that will likely be accompanied by looser lending standards and a rebound in certain struggling subsegments.
There are also risks facing the industry. If statewide economic growth slows, or even fails to accelerate, that will weigh on construction activity. Trade and immigration policy also represent significant risk factors, and tariffs have put renewed upward pressure on materials prices. This is especially true for inputs most exposed to tariffs, with prices for certain metal inputs up more than 30% over the past year.
Ultimately, the current environment continues to be defined by uncertainty, and project owners will remain reluctant to go forward with large investments until that improves.
