Construction sector more resilient than expected

The 2degrees Shaping Business 2026 Report finds construction among the most upbeat sectors in the country — but the firms doing well are the ones lifting productivity, not waiting for a rebound

After a bruising few years marked by project delays, rising costs and broader economic uncertainty, the construction sector is showing more confidence than many might expect. New findings from the 2degrees Shaping Business 2026 Report suggest the sector is adapting, investing and planning for growth, not just waiting for conditions to improve.

The report shows 44% of construction businesses feel optimistic about the year ahead, compared with 36% across the wider business population. 75% of construction businesses expect revenue growth over the next 12 months, placing the sector among the most upbeat in the country. That level of confidence is notable at a time when many firms are still navigating cost escalation, slow-moving projects and a more cautious client market.

The findings point to a sector that is moving beyond a short-term recovery mindset. Instead of focusing solely on surviving a difficult cycle, many construction businesses appear to be positioning for the next phase of activity through investment, productivity improvements and tighter operational management.

The report indicates that confidence is more linked to performance rather than the hope of a return to ‘normal’ conditions. That suggests the businesses that are doing well aren’t necessarily the ones waiting for a market rebound, but are the ones lifting efficiency, improving systems and looking for ways to stay competitive in a tougher operating environment.

For many in the sector, that likely means more attention on workflow, delivery timelines, technology adoption and the practical question of how to do more with the same or fewer resources. In a market where margins remain tight, even small gains in productivity can make a meaningful difference.

While cost pressure remains a major issue, the report suggests the shape of that pressure is changing. Labour shortages are no longer the dominant concern they once were. Instead, businesses are increasingly focused on rising fixed overheads, particularly utilities, insurance and lease costs.

That’s important because those costs are harder to control than wages or variable inputs. They can also accumulate quickly, especially for firms carrying workshops, depots, office space or a fleet of vehicles and equipment. The report says utilities, insurance and leases rose 10% as a source of cost pressure in 2026. Structural overheads are now weighing more heavily on business decisions.

This may sharpen the focus on overhead review, supplier renegotiation, equipment usage and smarter asset management for contractors. It also reinforces the need for strong pricing discipline, because businesses are clearly still passing through higher costs where they can.

One of the clearest signals in the report is that productivity is becoming central to future success. Construction businesses are increasingly focused on technology and operational efficiency as key drivers of growth. Across business, the report also finds that productivity improvement has stalled, with inflation and time constraints emerging as significant barriers.

That’s a challenge and an opportunity for the construction sector. Digital tools, better job management systems, improved scheduling and data-led decision-making can help offset pressure elsewhere in the business. The report also shows construction businesses are strongly represented among those who feel they possess the digital skills needed to get ahead, suggesting the sector may be more ready than some others to adopt practical technology solutions.

That is encouraging for a trade where productivity gains have historically been difficult to sustain. If businesses can combine stronger digital capability with better planning and tighter control of overheads, the sector may be better placed to handle the next phase of market volatility.

The message isn’t that conditions are easy, far from it. The sector is still operating in an environment shaped by cost escalation, cautious clients and ongoing uncertainty. But the report suggests many firms are no longer waiting for a turnaround. They are adjusting to a new normal in which success depends on efficiency, adaptability and disciplined growth.

That makes this a useful moment for firms to reassess where profit is being lost, where time is being wasted and which systems could support better output. It also suggests confidence is still available for businesses that can demonstrate reliability, control costs and deliver value in a market that rewards resilience.

If the headline story of the past few years was survival, the next one may be about selective growth. And in construction, that could prove to be the difference between simply staying busy and building a stronger business for the years ahead.