Construction industry says costs will continue rising this year

CIF Q2 2026 Construction Outlook Survey found 94% of firms reported an increase in raw material costs between January and March 

The cost of construction is continuing to rise, with 96% of firms in the sector expecting further increases as higher labour and material costs drive up project pricing, a report by the Construction Industry Federation (CIF) said. Picture: PA

The cost of construction is continuing to rise, with 96% of firms in the sector expecting further increases as higher labour and material costs drive up project pricing, a report by the Construction Industry Federation (CIF) said.

The CIF Q2 2026 Construction Outlook Survey found that 94% of firms reported an increase in raw material costs between January and March 2026, while 96% said they expected further increases in the second quarter of the year. The survey is based on responses from 138 construction companies.

“Construction firms remain active and cautiously optimistic, but the reality is that cost pressures and structural constraints are increasingly impacting delivery," said CIF chief executive Andrew Brownlee. "Without reforms to support viability and participation ─ particularly in public works ─ there is a real risk to the pace of infrastructure and housing delivery. Looking ahead, demographic pressures from the mid-2030s will place further strain on public finances, underscoring the urgency of accelerating delivery today.”

Construction employment remained broadly stable overall, with modest growth expected in the coming months, particularly in specialist contracting. Some 65% of firms anticipate no change in staffing, while 22% expect to increase staffing levels. 

The CIF outlook said that new orders were "broadly flat to slightly negative" in recent months, but expectations are more positive, with overall increases anticipated. Growth is expected to be strongest in specialist contracting and civil engineering, while home building remains relatively stable.

Almost half of respondent firms said they did not carry out any public works in the previous three months. One in five (21%) companies expect the level of their involvement in public works contracts to increase in the next year. Low margins, price-based tendering, and bureaucracy were cited as key constraints on public works. 

Export activity remains positive, the outlook said, with most exporting firms reporting increased turnover in Q1.