- Focus on optimizing cost and profit structures
- Global employment projected to rise by 3% by year-end
- Digitalization climbs in priority due to its role in efficiency and cost optimization
The construction industry is looking ahead with optimism. Leading sector representatives anticipate a 6% increase in revenue and a rise in EBIT margin to 9% by the end of the year. As in the previous year, optimizing cost and profit structures remains the top management priority. Digitalization programs have gained importance, moving from third to second place in the priority ranking – primarily due to their critical role in improving cost structures and operational efficiency. These are key findings from the Horváth study “Industry Trends in Construction.”
Innovation, research, and development rank third among management priorities, serving as enablers for future technologies such as modular construction, AI-driven planning, automated job sites, and advanced materials. These innovations help boost productivity and create competitive advantages. In contrast, ecological sustainability has dropped in importance, falling from fourth to ninth place due to a stronger focus on economic factors.
The industry’s positive momentum is expected to translate into global employment growth. Top executives forecast a 3% increase in workforce by the end of 2025. Over the next five years, the strongest growth is projected in India (94%), followed by Africa (69%) and Eastern Europe (67%). In contrast, Western and Southern Europe – where average wages are higher – are expected to see only a 10% increase, the lowest rate globally.
“India, Africa, and Eastern Europe are gaining strategic relevance due to their young talent pools with strong expertise in digital services,” says Sebastian Wichert, Principal at Horváth. “Rapidly expanding construction sectors and attractive government incentives further enhance the appeal of these regions. Companies are actively investing in these markets to mitigate risks and strengthen competitiveness.”
Interest Rate Volatility and Labor Shortages Put Pressure on the Sector
The biggest challenge for the construction industry in 2025 is interest rate volatility. 49% of respondents cite it as having a significant impact on business, followed by labor shortages (38%) and inflation (37%).
“The construction sector is highly dependent on credit – rising interest rates immediately dampen investment in housing and infrastructure,” explains Wichert. “Labor shortages add further pressure: with automation progressing slowly, the availability of skilled tradespeople, technicians, and site managers remains critical to project success.”
Compared to other industries, the construction sector is less affected by new US tariffs on EU goods. Only 34% of respondents expect a strong or very strong impact, versus 46% across all industries and 51% in manufacturing. This is largely due to the sector’s low export orientation and reliance on local supply chains.
Industry Sets Ambitious Climate Goals
Despite the drop in sustainability as a management priority, the topic remains relevant. 85% of respondents believe that sustainability requirements for construction projects are increasing. Accordingly, the industry has set ambitious climate targets: 52% of companies aim to achieve climate neutrality by the end of the 2030s, with 16% targeting the end of the 2020s. 76% plan to be climate-neutral by 2044, aligning with the German federal government’s timeline. The remaining companies are aiming for later dates.
AI Adoption Still in Early Stages
Although innovation ranks high on the agenda, AI adoption in the construction industry is still in its infancy. Most initiatives are currently in pilot phases, with 34% to 44% of companies reporting early-stage implementation depending on the business area. Only 1% to 4% have fully integrated AI into their operations. The greatest need for catch-up is in performance management, where 36% of companies have yet to begin using AI.
Nevertheless, companies expect significant productivity gains from AI over the next three years. The highest impact is anticipated in IT and digitalization (14%), followed by sales and marketing, and finance and controlling (each at 11%).
About the Study
The Horváth study “CxO Study 2025 – Industry Insights Building & Construction” is based on in-depth interviews with more than 80 senior executives from the construction sector. The survey is part of Horváth’s international CxO Priorities Study, which gathered insights from over 1,000 top executives across industries worldwide.
