Carolinas Contractors See Strong Opportunities in Key Markets Despite Broader Uncertainty

Results from AGC of America's newly released 2026 Construction Outlook show contractors across the Carolinas are entering the New Year with cautious optimism, especially in health care, power, water/sewer, and data center markets.

While national expectations have "dampened" overall, North Carolina and South Carolina firms continue to report notable areas of momentum, along with steady backlogs and plans to grow their workforce.

"While contractors across the country are facing real uncertainty, the outlook from our members in North and South Carolina shows clear areas of strength," said Dave Simpson, president and CEO of Carolinas AGC (CAGC).

Simpson added, "Health care, data centers, power, and water and sewer work are creating meaningful opportunities across the Carolinas. Backlogs remain solid and many firms are planning to hire, which tells us construction is still a driving force for economic growth in our region.”

And he continued, “At the same time, workforce shortages and rising costs continue to be major challenges, reinforcing how important advocacy, workforce development, and smart infrastructure investment will be in the year ahead."

North Carolina contractors reported some of the strongest optimism in the southern region. The most positive outlooks were tied to health care, data centers, and power-related construction.

"We are seeing strong opportunities across data centers, water and wastewater, energy, manufacturing, and institutional work. There is a lot being built in North and South Carolina, and that diversity is important," said Jim Rhodes, senior vice president at Wayne Brothers Companies. "It allows our industry to stay healthy and keep moving forward, even when individual markets fluctuate."

South Carolina contractors reported optimism that exceeded the Southern regional averages in several major markets, led by hospital, K-12, and data center construction.

• Hospital construction leads all South Carolina markets with a 70 percent net positive outlook.
  
  

• Data centers followed closely at 67 percent, and other health-care facilities posted a 60 percent positive reading.
  
  

• Public buildings and higher education both came in at 56 percent net positive expectations, signaling continued demand in institutional work.

Confidence levels were similar to North Carolina. Approximately 60 percent of South Carolina contractors said they are very confident or confident in their backlog and bidding pipeline, and 45 percent reported larger backlogs than a year ago. Hiring plans remain aggressive, with 70 percent expecting to increase headcount in 2026.

Labor pressures are even more pronounced in South Carolina. In all, 76 percent of firms reported difficulty filling craft positions, and 95 percent said they are struggling to fill salaried roles.

Rising labor costs and worker availability ranked among the top concerns heading into 2026.

Across the broader Southern region, contractors' strongest growth expectations are centered on data centers (60 percent net positive), hospitals (33 percent), power (32 percent), and water/sewer (28 percent).

Retail and private office construction posted negative outlooks, reflecting a broader market shift already underway.

Compared to the Southern averages, both North Carolina and South Carolina outperformed the region in health care, power, and data center optimism, reinforcing the Carolinas' position as a leader in these sectors, officials said.

Regionally, about 71 percent of Southern firms expect to increase staffing levels, even as workforce shortages, rising labor costs, and economic uncertainty remain top concerns.

Nationally, AGC's outlook found that contractors' expectations have softened overall, outside of data centers and power projects.

Economic uncertainty, financing costs, tariffs, and workforce shortages continue to weigh heavily on contractors' outlooks.

Against that backdrop, the Carolinas results stand out. Contractors in both states reported stronger-than-national confidence in health care, institutional, and utility-related markets, along with solid backlogs and continued hiring intentions.

Despite the challenges, most Carolinas firms plan to grow in 2026, signaling continued demand for construction services and reinforcing the importance of Carolinas AGC's advocacy, workforce, and industry support efforts in the year ahead.

Carolinas AGC (CAGC) is a construction trade association made up of small and large commercial contractors and construction-related firms that perform building, utility, and/or highway work in the Carolinas.