economic outlook MICA MESSENGER 43 feeling the sting of a slowing economy, high interest rates, and an environment rife with uncertainty. “Many areas of non- residential are trending flat or edging down,” said Conerly. “Even the chip fabs, while still strong, are tapering down.” The one bright construction sector: data centers. They show no signs of diminishing and are big customers for electricians, plumbers, and suppliers of scaffolding and manufactured products of all kinds. “When I look at the detail and the economic statistics of what kind of capital equipment is being bought, I am seeing a lot of data center-related equipment in there,” said Conerly. “Data centers also require a lot of garden variety wiring, connectors, and plumbing for cooling.” Every sector of the construction industry shares a common challenge: labor availability. Oxford Economics forecasts an unemployment rate of 4.4% and 4.3% at the end of 2025 and 2026, respectively. That’s not much higher than the 4.1% clocked at the end of 2024. Low unemployment, largely due to slowing growth in the nation’s working age population and aggressive immigration policies, can result in rising labor costs. Business confidence For all business sectors, money and labor are not the only production factors on the rise. “The real problem is the world has become much more expensive in the last few years,” noted Basu. “Construction materials are more expensive. And of course there are tariffs on items like steel, aluminum, and copper.” Little wonder the high cost of doing business is top of mind for many operators. “As we head into 2026, the area of most concern for the construction industry is profit margin,” said Basu. “Many operators are simultaneously experiencing an increase in costs of delivering services while demand fades.” Given the variety of business concerns, it’s little wonder many projects are being put on hold. “It’s hard to engage in cost savings when both materials and labor are becoming more expensive,” said Basu. “Too often, the pro formas don’t pencil out. Many companies are responding by not expanding their operations and trying to trim expenditures at the margins. They are focusing more on cash flow preservation by slowing hiring, and being less aggressive in leasing and purchasing equipment, particularly equipment impacted by tariff pricing.” This generalized business hesitation is evidenced in the numbers. “We look for business investment to increase by only 1.6% in 2026, after rising by 3% in 2025 3.6% in 2024,” said Yaros. Looking ahead As we enter the early months of 2026, economists suggest that companies in the construction industry watch these key economic indicators for an idea of how the year will turn out: #Employment “I would pay close attention to the unemployment rate,” said Yaros. An unexpected decline in employment would spur faster interest rate cuts as the Fed seeks to reinforce economic expansion. #Consumer spending “How is the consumer faring?” poses Basu. “Bear in mind that many low and middle income people are exhausted financially. Indebtedness and delinquencies are up for credit cards, mortgages and loans.” #Inflation “If we get stubbornly high inflation, that SHAPING THE INDUSTRIAL INSULATION MARKET FOR OVER 35 YEARS Extol Insulated Supports FABRICATING EXCELLENCE • Designed for use in the industrial and commercial insulation industry • Easy to specify, order and install • Available for all types of piping systems • Meet or exceed industry standards • From the typical support system to the most complex applications, our products fit and perform SETTING THE STANDARD THROUGH CUSTOMIZATION When it comes to engineering a quality product, one size does not fit all. Extol Insulated Supports are designed based on information that is unique to your application, and are fabricated to your specifications. 208 Republic Street, Norwalk, OH 44857 ExtolOhio.com • info@extolohio.com 800-486-9865 • 419-668-2072 • Fax: 419-663-1992
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