The Associated General Contractors of America published its 2026 Construction Hiring and Business Outlook report earlier this year. The survey of AGC member firms provides the most comprehensive annual snapshot of what contractors actually think about the year ahead: their concerns, their hiring plans, and the headwinds they are navigating. The report found that 62% of firms cited economic slowdown or recession as their top concern for 2026, a notable shift from fifth place the prior year. The next three most cited concerns were workforce-related: 57% cited insufficient supply of workers or subcontractors, 56% selected rising direct labor costs, and 53% identified worker quality. Materials costs were the only other concern chosen by a majority of firms at 53%. The full report is available at agc.org (Source: AGC of America, agc.org, 2026).
Read together, these numbers describe an industry running at full capacity while simultaneously worried about whether the capacity will be needed. The 62% slowdown concern is a notable shift from the prior year, when it ranked fifth. It reflects macro uncertainty around interest rates, tariff impacts, and federal spending timelines rather than an observed slowdown in active work. The ABC Construction Backlog Indicator at 8.6 months in March 2026 confirms that active work is not slowing. But the concern about whether that pipeline sustains itself through 2027 is real.
“Out of 19 listed choices, economic slowdown or recession emerged as the most often mentioned concern, cited by 62% of firms. This marks a notable shift from last year, when it ranked fifth. The next three most cited concerns were workforce-related: 57% cited insufficient supply of workers or subcontractors, 56% selected rising direct labor costs, and 53% identified worker quality.” Source: AGC 2026 Construction Hiring and Business Outlook · agc.org · 2026
For Texas contractors, the labor concern is the most operationally immediate. 57% of firms cited insufficient supply of workers or subcontractors as a top concern. In Texas, that shortage is concentrated across the I-35 corridor, the DFW industrial market, and the AI campus construction zones in Abilene, Taylor, and West Texas. The AGC survey finding aligns with what ABC Central Texas noted earlier this spring: frontline supervisors are the pressure point where projects win or lose.
The materials cost concern cited by 53% of firms connects directly to what the BLS May PPI confirmed last week. Construction input prices rose 8.4% year-over-year. Aluminum, copper, and steel are driving the tariff-related component of that pressure. Aggregate and road base are not in the tariff line of fire, but the diesel fuel PPI rose 106% year-over-year and that cost lands on every delivered aggregate load. For contractors reviewing their materials cost exposure, knowing which line items are tariff-driven and which are fuel-driven helps allocate contingency more accurately. Market Intelligence
The AGC survey puts numbers to what Texas contractors are feeling. Running full with a backlog approaching a year of committed work, while simultaneously worried about slowdown, labor, and cost — that is the exact environment where material sourcing relationships established in advance are the difference between staying on schedule and scrambling.