Global Construction Industry Trends 2025/2026

The cost of materials, labour shortages and pressures to reduce carbon emissions are all issues for the construction industry in various markets.

23 Jan 2025

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What issues affect the global construction industry?

Our industry specialists located in the world’s major markets have identified several pain points facing the global construction industry. From the cost of materials to labour shortages, many of these issues are associated with a rise in insolvencies in the industry.

Construction material costs have declined, but the impact persists

While construction material costs in many markets are now easing, many remain stubbornly higher than before the inflationary period. The result is that margins remain tight in some markets. This is especially true for markets in emerging Asia, placing a heavy burden on smaller businesses in particular.

The outlook is a little brighter in advanced markets where calming inflation has had a beneficial impact on the cost of construction materials.

"Large builders offer higher wages, disadvantaging smaller construction businesses."

Labour shortage in the construction industry: a mixed picture

The question of labour shortages in the construction industry has two different answers.

In East Asia (with the exception of Japan) there is no significant problem with finding construction workers. However, the same cannot be said for many advanced markets including Japan, Australia, Europe and the USA. Here serious labour shortages are impacting everything from profit margins to delivery deadlines.

Sustainable construction practices

Construction accounts for more than a third of the world’s energy use and 40% of global emissions. In some jurisdictions, such as the EU, the industry has to comply with sustainability targets, which can present added pressure for construction businesses already grappling with construction costs and labour shortages.

However, sustainability targets also present opportunities. These include government investment in large infrastructure projects to support clean energy transition, creating growth in the civil engineering segments.

"Reducing emissions is a severe challenge, needing green investments amid high costs"

Digital transformation in the construction industry: can new technologies solve construction's challenges?

New technologies are increasingly being used in many areas of the construction industry, from architect studios to building sites. Many of these can help alleviate the problems associated with labour shortages, including scheduling software, offsite construction technologies and the use of drones in areas such as site inspections.

However, this is not a solution that is accessible to all. High costs can prove to be an entry barrier, especially for smaller businesses.

Download the report for a detailed analysis of the construction industry's challenges, performance, and credit risks worldwide.

Summary

Although construction materials pricing has normalised in some markets, they remain high in East Asia, putting added pressure on small businesses in particular.
Recruitment difficulties and high wage costs are a serious issue in most advanced markets, impacting both project margins and delivery deadlines.
There is pressure in some markets, such as the EU, to meet industry sustainability targets. In other markets, such as the USA, there is less pressure, with a focus on incentives to encourage sustainability.
Advances in new technology do provide opportunities for the construction industry. However high entry costs present a barrier for the smaller ones.