California Construction


in 2026 Navigating a Slower, Uneven Recovery


C


alifornia’s construction market entered 2025 with solid momentum, particularly in civil,


water, and sewer works, notwithstanding constraints the industry faced. In the AGC of California 2025 Work-


force Survey, California contractors iden- tified governmental delays, lead times for electrical equipment, and worker shortages as significant hurdles. The challenges present at the beginning of 2025 were compounded by various un- foreseen developments, beginning with the Los Angeles wildfires. Te generally upbeat outlook many expected for 2025 instead gave way to new unforeseen developments that included federal policy shifts which reshaped the broader economic environment. New tariff actions that filtered through ports


20


CALIFORNIA CONSTRUCTOR JANUARY/FEBRUARY 2026


and supply chains, adding cost and uncer- tainty for contractors, were a prominent factor in the loss of momentum. As we look toward 2026, the industry faces another year of uneven growth.


Infrastructure Projects Support Big Upcoming Events Areas of growth will still include civil


work, infrastructure, and public works projects. Te state has a vested interest in building out its high-speed rail and other transportation systems to support the flood of people it expects for the 2026 World Cup, 2027 Super Bowl, and 2028 Olympics. Renovations of universities and healthcare construction are areas also expected to generate work. Sustained growth, however, will hinge on whether unforeseen economic shocks


BY MACRINA WILKINS


SENIOR RESEARCH ANALYST,


AGC OF AMERICA


will worsen borrowing costs, labor avail- ability, or further delays to the construc- tion market. Getting an accurate assessment of


where the industry is now, on the eve of 2026, has been hindered by interruptions in data availability, due in part to the government shutdown, which lasted from October 1, 2025, until November 12, 2025. Based on the latest available figures,


California’s construction sector softened in August 2025, with employment down 16,900 jobs year over year (-1.9%) as slower project starts and higher financing costs weighed on activity. Losses were concentrated in Southern California, namely, Los Angeles, Riverside, and Ana- heim. Modest gains seen in San Jose and San Francisco were not strong enough to offset declines in employment elsewhere.


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