Construction Outlook Points to Uneven Market Heading Into 2027

Labor shortages, rising costs and project delays cloud the 2027 construction outlook, while data centers remain a bright spot

Kermit Baker presents at METALCON — Photo courtesy of Neubek Photographers

At METALCON, economic keynote speaker Kermit Baker, former chief economist for the American Institute of Architects, pointed to inflation, elevated borrowing costs, labor shortages, project delays and rising material prices as continued pressures on construction.

Roofing and construction contractors could face another uneven year in 2027 as persistent labor shortages, higher material costs and financing challenges weigh on projects, even as data-center construction continues to surge.

Kermit Baker, former chief economist for the American Institute of Architects, outlined the competing pressures facing contractors during an economic keynote at METALCON 2026, held Oct. 7-9 in Orlando.

Baker said construction input costs increased nearly 9% over the previous year, with particularly steep increases for metals including steel, copper and aluminum. Labor also remains a major concern as the construction workforce ages and contractors struggle to fill positions.

Baker noted that 35% of the overall construction workforce is foreign-born, with the share exceeding 50% in several trades, including roofing.

“Probably the greatest challenge facing the industry at present is the labor outlook,” Baker said.

Project pipelines are also showing signs of strain. Architecture-firm data presented by Baker showed roughly 30% of project volume had been delayed, stalled or canceled during the preceding six months. Client indecision, changing market conditions, inadequate budgets and financing challenges were among the primary reasons.

One major exception is data centers. Fueled partly by investment in artificial intelligence, the sector continues to generate significant construction activity.

“Data centers have been going nowhere but up; the sky seems to be the limit,” Baker said, adding that data-center spending is expected to surpass traditional office construction spending by year-end.

The broader outlook is considerably more restrained. Baker said forecasters expect no increase in overall construction spending this year and only a modest gain in 2027, with that growth likely failing to keep pace with inflation.

METALCON 2026 drew 273 exhibiting companies, up 9.2% from 2025, while verified on-site attendance increased more than 5%. The metal construction industry event returns Oct. 26-28, 2027, at the Kentucky International Convention Center in Louisville, Ky.