Construction industry loses momentum due to high interest rates and lack of labor

2025 is a lukewarm year for construction in Brazil, and prospects for improvement are slim. Six out of ten industry executives believe the sector is stagnating and that this situation is expected to continue over the coming months.

This market analysis is part of a study conducted by Falconi consulting firm, called "The Construction Thermometer." The document highlights that the high cost of financing (interest rates) and the lack of qualified professionals are currently the main challenges faced by construction and development companies.

Despite the unfavorable economic climate, the construction market remains optimistic. More than 58% of industry leaders express optimism about the next six months, while 41.7% maintain a more cautious or pessimistic stance.

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Among those who intend to make investments in 2025, the priority will be the acquisition or development of new technologies (75%), followed by the expansion and use of industrialized construction methods (50%) and improvements in the management of construction costs (50%).

However, among the obstacles, labor shortages topped the list of concerns, cited by 71% of respondents (compared to 52% in 2023). Next came high interest rates (48%), the cost of materials and services (37%), and market demand (36%). In 2023 (the study is conducted every two years), market demand was the most relevant issue, cited by 63%.

"It's undeniable that the difficulty in attracting and retaining skilled labor is delaying the sector's transformation," said André Chaves, vice president of the Basic Industry and Capital Goods unit.

To overcome short-term challenges, executives are focusing on investments to improve project cost management (74%), workforce training and qualifications (57%), and brand strengthening (43%). In the survey conducted two years ago, companies prioritized completing projects on time (66%), improving the customer experience (44%), and investing in industrialization (41%).

The "Falconi Construction Thermometer" survey included 120 industry executives, 35% of whom were CEOs, owners, and directors. Interviews were conducted between June 2nd and July 10th.