The North American engineering and construction industry is entering a critical transition year in 2026, defined by a shift from broad growth cycles to highly uneven performance across different sectors and regions. While overall construction activity remains stable, the landscape is increasingly shaped by macroeconomic forces, geopolitical competition, and the rapid adoption of digital tools.
Executive Summary: Resilience Over Prediction
As the industry moves into 2026, “resilience” has become the mandatory watchword for leadership. Faced with tight credit, persistent labor shortages, and the risk of a recession in private development, successful firms are moving away from broad assumptions toward disciplined, scenario-based preparation. Organizations that invest in their leadership pipelines, establish robust data frameworks, and accelerate the adoption of AI will be best positioned to navigate these evolving conditions.
Five Key Trends Shaping 2026
- Diverging Market Conditions: Broad growth is being replaced by sector-specific performance. While some private sectors are softening, mission-critical segments like power and infrastructure remain strong.
- Mission-Critical Infrastructure: The next wave of growth is being driven by power, data centers, and the infrastructure that supports them. Data centers alone now account for more than 25% of total nonresidential building construction in some markets.
- Sustainability and Electrification: No longer just driven by policy, sustainability and electrification have become core economic considerations. Rising energy costs and extreme weather events are fueling demand for resilient infrastructure that can withstand future climate conditions.
- The Digital and Labor Performance Gap: Labor availability remains a persistent challenge, with the industry adding only 14,000 net new jobs in 2025. A widening performance gap is emerging between companies that successfully integrate digital execution with workforce development and those that do not.
- Geopolitical Influence on Spending: Sustained efforts to decouple sensitive economic sectors from China are driving federal funding toward domestic manufacturing and hardened infrastructure across the United States and Pacific.
Regional Outlook: U.S. and Canada
- United States: The U.S. market is characterized by extreme growth in specific subsegments. Data centers, power, manufacturing, transportation and water-related areas are stabilizing the overall market despite a cooling residential sector. While manufacturing construction is expected to decline by 6% in 2026, it is projected to rebound by 2027 as large projects move beyond early construction phases.
- Canada: Total engineering and construction spending in Canada is forecast to reach $456 billion in 2026, a 4.5% increase from the previous year. The market is buoyed by strong infrastructure and multifamily residential spending, which helps balance a weaker nonresidential building sector. Conservation and development (8.2% CAGR) and transportation (7.8% CAGR) are expected to be the fastest-growing Canadian segments through the forecast period.