Construction industry executives report little change in sentiment between Q2 and Q3. ENR’s Confidence Index rose one point to a still slightly pessimistic 48 rating this quarter. Firms say tariffs and high interest rates have made the current economic outlook foggy, and as one firm put it: “No one drives fast in the fog.”
The confidence index measures executive sentiment on where the current market will be in the next three to six months and over a 12- to 18-month period, on a 0-100 scale. A rating above 50 indicates a growing market. The measurement is based on responses by U.S. executives of leading general contractors, subcontractors and design firms on ENR’s top lists to surveys sent between August 4 and September 15.
The economic index fell slightly between last quarter and this quarter, down two points to a 44 rating. Execs report an increasingly negative short-to-medium term outlook. Last quarter 30.8% of firms saw a declining market 3-to-6 months from now. This quarter, that number is up to 38.3%. More firms also see a declining construction market during the same time period this quarter (31%) than last quarter (26%).
Source: ENR/BNP Media
Designers are more pessimistic than either GC/CMs or subcontractors, as they were last quarter. Taken separately, they come in at a 41 rating. However, that is up six points from Q2. Design firms confidence in the market 12-18 months from now rose 12 points in Q3, to a 58 rating. GC/CM confidence also rose, up 5 points to a 52 rating this quarter. Confidence among subcontractors moved in the opposite direction between Q2 and Q3, falling seven points to a 47 rating.
The results of the Confindex survey from Princeton, N.J.-based Construction Financial Management Association (CFMA) came in slightly more positive than ENR’s results. Each quarter, CFMA polls CFOs from general and civil contractors and subcontractors on markets and business conditions. The resulting Confindex is based on four separate financial and market components, each rated on a scale of 1 to 200. A rating of 100 indicates a stable market; higher ratings indicate market growth.
All indices tracked by the Confindex survey rose slightly between Q2 and Q3 except for the “financial conditions” index, which fell one point to a 104 rating. The overall Confindex rose 3% to 104 this quarter. The “business conditions” index saw the biggest gains, rising 9.4% to a 105 rating. The “current confidence” index remains below the 100 benchmark rating at 97.
Source: ENR/BNP Media
Sage CEO and CFMA advisor Anirban Basu says the data reflects a market poised between short-term pessimism and longer-term optimism. “There was a time mid-year when the market thought that we were not gonna get any rate cuts in 2025—and all of a sudden, let’s talk about three rate cuts.” The Federal Reserve’s Federal Open Market Committee voted 11-1 on September 17 to lower interest rates by a quarter percentage point.
Basu thinks the tax cuts baked into the Trump administration’s One Big Beautiful Bill Act are a cause for longer-term optimism, predicting next year will bring “a lot of tax savings for both households and businesses,” he says. “Some of these refunds, especially for wealthier Americans, are to be massive come February and March of next year.” He also points to restoration of 100% bonus depreciation.
Basu adds, “I don’t think anyone’s expecting a boom, but there’s enough there between tax cuts and lower borrowing costs to help stabilize sentiment.” The Confindex’s “year ahead outlook” index was its strongest in Q3, coming in at 113.
However, the Sage CEO still expects “hot and heavy” inflation. He explains, “A lot of the inflation has been on the services side of the economy recently, not on the goods side. I think you’re about to see that change because many of these companies can no longer absorb these increased costs.”
Subcontractors are particularly feeling the pinch, Basu says. “Subcontractors have been saying: We’re having to work harder to stay busy. We are facing higher costs for all of these tariffs. Because we need to stay busy, we are not going to try to pass long all of these increased costs to the general contractor in our bids. But subcontractors have bills to pay.”
Market Ups and (Mostly) Downs
“Two categories that have an undeniable momentum going forward are data centers and power,” Basu says. “Other than those segments, I don’t see a lot of strength across the US construction industry.”
Some publicly financed categories that had been driving construction growth, such as highways, have been weakening, Basu adds. Authorization for the Infrastructure Investment and Jobs Act lasts until September 30, 2026. “There is very little chatter about the next infrastructure bill,” Basu says. “I think the Trump administration is of a mind to push more of that spending onto state and local governments.” According to Basu, state and local finances are not as strong as they have been. “In fact, of the 25 largest American cities, 20 are indicating some fiscal difficulty in 2026 and beyond,” he says.
Execs remain most confident in the power (a 85 rating) and water supply (76) markets, with power above 70 the past eight quarters. Confidence is lowest in the commercial offices (23) market.
