ING Research indicates European construction companies are increasingly positioned to expand profit margins due to persistent labor shortages and rising demand, which are tightening capacity and enabling contractors to pass on higher costs to clients. The sector's gross operating surplus, a key measure of value added, has remained stable since 2008 despite cyclical fluctuations and cost pressures, with a temporary setback during the 2022 energy crisis proving short-lived. EBITDA margins at 30 large European firms tracked by ING rose from 5.9% in 2018 to 7.1% in 2024, though still below the 8.5% average recorded between 2007 and 2012.

Labor shortages are a primary driver, with Eurostat reporting 27% of European contractors citing staff shortages as limiting output at the start of 2026. ING's undercapacity measure is most acute in Portugal and the Netherlands, contrasting with overcapacity conditions in Finland and Spain. Since 2015, building material and wage costs for new residential projects across six EU countries have surged over 40%, while contractors have lifted sales prices even more sharply, supporting modest residential profitability gains.

Input cost increases in the Netherlands have outpaced those in Finland over the past decade, pressuring firms to protect margins. Large contractors have become more selective, avoiding higher-risk fixed-price mega-projects and reporting higher 2025 profit margins. However, margin expansion remains constrained by higher input costs offsetting pricing gains, a fragmented market structure, and fixed government budgets limiting project volumes as construction costs rise. ING does not anticipate a repeat of the 2022-2023 building material price spikes but warns rising construction volumes will deepen capacity constraints, allowing contractors to prioritize higher-margin projects.