Heads Up: Skanska on Where We’re at with Tariffs, War and the Data Centre Boom

Why It Matters

Rising material costs and geopolitical energy shocks tighten construction budgets, while data‑centre growth reshapes labor demand and regional investment strategies.

Key Takeaways

• Material prices up 5.3% YoY, driven by Section 232 tariffs
• Data centre construction added 20% of non‑residential job growth
• PSI fell from 104.6 to 90.2, indicating fewer project delays
• US supply chain stays stable despite Middle East tensions, lead times lengthen
• AI adoption rises, promising productivity gains but may reshape labor demand

Pulse Analysis

The latest Skanska report underscores how tariffs, especially the Section 232 duties on steel, aluminium and copper, have become a primary driver of material inflation in U.S. construction. A 5.3% price rise over the past year forces developers to reassess budgeting assumptions and consider longer‑term contracts for high‑volume commodities. At the same time, the geopolitical fallout from the Strait of Hormuz blockage has pushed energy prices higher, adding another layer of cost pressure for projects reliant on fuel‑intensive logistics and on‑site power generation.

Despite these headwinds, the labor market remains surprisingly resilient. The industry added about 50,000 workers—0.6% year‑over‑year—largely thanks to a booming data‑centre segment that accounts for a 20% jump in non‑residential employment. This high‑tech surge is offset by a modest 1.5% decline in residential construction jobs, creating a regional mosaic where the West and Pacific Northwest see commercial softness, while the Southeast, Mid‑Atlantic and central states thrive on data‑centre and life‑science builds. The Project Stress Index’s drop from 104.6 to 90.2 reflects fewer project hold‑ups, suggesting that early contractor involvement and off‑site construction methods are mitigating risk.

Looking ahead, AI adoption is set to reshape productivity and labor dynamics. Construction firms are deploying AI agents to accelerate design reviews, cost estimating and schedule optimization, promising efficiency gains that could offset some material cost escalations. However, the technology also raises questions about future labor demand, especially for specialty trades in high‑tech projects. Stakeholders must balance immediate cost‑containment strategies—such as locking in long‑lead material orders and building contingency budgets—with longer‑term investments in digital tools and sustainable data‑centre infrastructure to stay competitive in an increasingly volatile market.