A flat construction outlook for 2026 is expected to create uneven demand for commercial roofing contractors, with growth in infrastructure and data centers helping offset declines in other sectors.

Total U.S. engineering and construction spending is projected to hold at just under $2.2 trillion in 2026, following a 1.4% decline in 2025, according to a second-quarter outlook from FMI, a consulting and investment banking firm serving the built environment.

The industry is experiencing what FMI describes as a “sector-specific recession,” with eight of 19 construction segments expected to decline amid high interest rates, tighter lending standards and a thinning project pipeline.

“Construction isn’t just slowing. It’s contracting outside of a broader recession,” said Brian Strawberry, chief economist at FMI.

For commercial roofing contractors, the mixed outlook reflects where projects are still moving forward. Infrastructure sectors — including water, sewage and power — are expected to remain a steady source of work, supported by federal funding and regulatory demand.

Data centers also continue to drive commercial construction, accounting for more than half of private office activity and requiring significant roofing scope.

At the same time, contractor data suggests activity remains stable. Associated Builders and Contractors reported backlog rose to 8.6 months in March, with confidence in sales, profit margins and staffing all above growth thresholds.

“Backlog has fully rebounded from January’s four-year low,” said ABC Chief Economist Anirban Basu, who noted rising oil prices and borrowing costs could still pressure construction activity.

Geopolitical risks, including conflict involving Iran, are also expected to increase material and transportation costs, adding further uncertainty for project planning.