Malaysia's Construction Engine Keeps Running: Work Value Up 8.8% in Q2 2026

The value of work done in the construction sector of Malaysia rose 8.8% year-on-year to RM47.8 billion in the second quarter of 2026, maintaining steady momentum after an 8.5% increase in the first quarter, the Department of Statistics, Malaysia (DOSM) reported on August 13, 2026. The mix behind the headline — double-digit growth in special trade activities and non-residential building, a private sector carrying two-thirds of the value — describes an industry expanding on commercial rather than budgetary legs.

The sub-sector mix: trades and non-residential lead

Performance was mainly driven by continued expansion in the special trade activities and non-residential building sub-sectors, which recorded double-digit growth of 17.6% and 13.3% respectively. The residential building sub-sector registered an 8.7% rise, followed by civil engineering with 2.7% growth.

Civil engineering remained the largest single contributor: RM16.7 billion, or 35% of the total work value done in the quarter, driven by the construction of utility projects (RM8.1 billion) and roads and railways (RM6.9 billion). Non-residential building contributed RM14 billion (29.3% share) and residential building RM10.9 billion (22.8% share). Special trade activities added RM6.2 billion (12.9%), supported by site preparation (RM1.5 billion), plumbing, heat and air-conditioning installation (RM1.3 billion) and electrical installation (RM1.3 billion).

Private money, public follow-through

The private sector remained the primary growth driver for the quarter, contributing RM31.4 billion, or 65.8% of the total value of work done. It sustained double-digit growth momentum at 11.4% (after 13.2% in 1Q 2026), driven by strong performance in special trade activities (20.2%) and non-residential building (18.2%). The public sector, meanwhile, raised the value of work done by 4.1% (after 0.5% in the first quarter) to RM16.4 billion, accounting for 34.2% of the total, supported by the special trade activities sub-sector (11%).

The quarter-on-quarter acceleration of the public segment — from 0.5% to 4.1% — is the quieter signal in the release: it suggests state-funded work re-entering the growth column after a slow start to the year, while private activity decelerated only marginally from an already high base.

Where the work is: four anchors hold two-thirds

A gate-by-gate project pipeline standing for the sub-sector mix of Malaysian construction work done in 2Q 2026

On a state-level basis, nearly 65.8% of the value of work done was concentrated in Selangor, Johor, the Federal Territories of Kuala Lumpur, Putrajaya and Labuan, and Sarawak. Selangor's work value was RM12.2 billion, or 25.5% of the national total, with non-residential building (RM4.8 billion) and residential building (RM3.2 billion) contributing the most. Johor took second place with RM9.4 billion (19.6%), primarily supported by non-residential building (RM3.5 billion); the Federal Territories recorded RM5.2 billion (10.8%), and Sarawak RM4.7 billion (9.9%).

The half-year picture

For the first half of 2026, the value of work done in the construction sector reached RM94.3 billion, an 8.7% rise versus a year ago. Growth was moderate against the 14.7% recorded in 1H 2025, with performance supported by positive growth across all sub-sectors, particularly special trade activities (21%) and non-residential buildings (13%).

What to watch

Whether special trade activities keep their double-digit pace into the second half, as site preparation and installation works front-run larger projects.
The public sector's recovery from 0.5% growth in 1Q to 4.1% in 2Q, and whether utility, road and railway works sustain it.
Residential building's 8.7% rise against civil engineering's 2.7%: a mix tilted towards buildings rather than heavy infrastructure.
Geographic concentration: four anchors holding about two-thirds of national work value, led by Selangor and Johor.
The gap between 8.7% half-year growth in 2026 and 14.7% in 1H 2025 — a deceleration in pace, not a reversal.

Malaysia's construction sector in mid-2026 is not booming at the 2025 pace, but it is not stalling either: an 8.8% quarter and an 8.7% half-year, carried by private non-residential and special trade work, with public infrastructure re-accelerating from a weak first quarter. For suppliers of building materials and installation services, the sub-sector table is the actionable part — the growth is concentrated exactly where trades, fit-out and electrical work are bought.