Design and Construction Report staff writer
The civil infrastructure sector is entering a phase of steady but slower growth,
with contractors focusing on execution and backlog quality rather than aggressive
expansion, according to a new industry report.
The FMI Fourth Quarter 2025 Civil Infrastructure Construction Index (CICI) stands at 50.6,
hovering just above the expansion threshold of 50. The report notes that 32% of survey
respondents operate in the Midwest, a region heavily engaged in the manufacturing and energy investment sectors that continue to perform well relative to national averages.
“Geographic variability remains pronounced,” the report notes. “Regions tied to manufacturing or energy investment [are] continuing to perform well, while those reliant on private vertical construction [are] slowing.”
For the Midwest construction community, the report highlights several headwinds:
- Labor Costs: Labor remains the primary driver of project budgets, with nearly half of all
firms reporting quarter-over-quarter cost increases.” - Productivity: Field productivity has stabilized but remains flat, with firms investing in
scheduling tools and project controls to protect margins. - Future Planning: Firms are planning for steady, organic growth through 2028, largely
ignoring speculative private development in favor of secure public infrastructure and utility
programs.
Key takeaways for the eastern regional market include:
Margin Squeeze: Despite healthy workloads, margins remain under pressure. Most
contractors report flat profitability as rising labor costs erode pricing power.
Segment Trends: Transit and rail, a critical sector for the New York tri-state area, remains
a key component of the industry, with 30% of national respondents active in that segment.
Strategic Hires: To maintain profitability, firms are focusing on strategic hires for leadership in complex project delivery methods rather than broad headcount expansion.
FMI predicts a more competitive environment for 2026, where profitability will depend on execution efficiency rather than market trends.
