New accords with partners like the UK, Japan and Indonesia have tempered some uncertainty. Although the doubling of steel import duties to 50 percent in June, and a proposed 50 percent levy on copper by August, are adding to cost pressures and keeping supply chains on edge.

Meanwhile, the newly enacted One Big Beautiful Bill Act (BBB) revives generous tax incentives for manufacturing and research and development (R&D). By restoring full expensing for new plants and permanent R&D write-offs, the BBB is expected to unlock a wave of factory projects and lift long-run growth, providing a tailwind to new construction.

Construction spending is currently weak, however, despite strong data center activity and solid public sector expenditure supporting growth. High financing costs and trade policy changeability has cooled private workloads, with housing and commercial activity notably set-back. On the upside, construction wage gains now outpace inflation, aiding worker retention.

Looking ahead, public investment and policy-driven projects (including BBB-fueled builds) should cushion the sector, but labor constraints and the shifting tariff landscape remain key challenges to growth through 2025 and beyond.

Escalation expectations for 2025 remain unchanged this quarter at 4 percent as the construction sector faces softer demand but higher input prices. Both 2026 and 2027 have been revised slightly upward from the previous quarter due to lagged tariff price increases becoming more prevalent in the years ahead.