Key Takeaways

• National nonresidential construction spending decreased 0.5% in March.
• On a seasonally adjusted annualized basis, nonresidential spending totaled $1.25 trillion for the month and is up year-over-year.
• "Given unprecedented economic uncertainty, spending is unlikely to rebound in the coming months. While a majority of contractors surveyed in March were still optimistic about their future sales...sentiment is likely to falter as the effects of tariffs begin to raise input prices and stall or cancel projects."

Press Release from Associated Builders and Contractors: ABC: Nonresidential Construction Spending Plunges in March

WASHINGTON, May 1—National nonresidential construction spending decreased 0.5% in March, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.25 trillion.

Spending was down on a monthly basis in 11 of the 16 nonresidential subcategories. Private nonresidential spending fell 0.8%, while public nonresidential construction spending was down 0.2% in March.

“Nonresidential construction spending fell sharply in March, with declines spread across virtually every private subsector,” said ABC Chief Economist Anirban Basu. “Data center investments, which accounted for more than 70% of the increase in private nonresidential construction spending between March 2024 and March 2025, are perhaps the only remaining source of industry momentum. Manufacturing construction, while still elevated, has wavered in recent months. Most commercial segments remain subdued under the weight of high borrowing costs and tight lending standards. Residential construction continues to slide.

“Given unprecedented economic uncertainty, spending is unlikely to rebound in the coming months,” said Basu. “While a majority of contractors surveyed in March were still optimistic about their future sales, according to ABC’s Construction Confidence Index, sentiment is likely to falter as the effects of tariffs begin to raise input prices and stall or cancel projects.”

Press Release from Associated General Contractors of America: Construction Spending Declines 0.5 Percent In March With Downturns In All Major Public And Private Nonresidential Categories

Demand for Construction Appears to be Dropping Amid Growing Uncertainty about the Impacts Tariffs and Trade Disputes will Have on Materials Prices and Overall Demand for New Projects, Economist Notes

Construction spending decreased 0.5 percent from February to March with a pullback in all of the largest nonresidential public and private project types, according to an analysis by the Associated General Contractors of America of a new government report. Association officials noted that the decline in construction activity comes amid growing uncertainty about the impacts tariffs and trade disputes would have on materials prices and overall demand for new projects.

“Construction spending retreated in March, as media reports and corporate announcements suggest owners are hesitant to start new projects in light of uncertainty over tariffs, government funding, and other policy upheavals,” said, Ken Simonson, chief economist of the Associated General Contractors of America. “Spending has slowed over the past year and as current projects wind down, there may be several months of declining construction activity.”

Spending totaled $2.20 trillion at a seasonally adjusted annual rate in March. The total was 0.5 percent below the February rate and only 2.8 percent above the March 2024 level. Simonson noted that was the slowest year-over-year growth rate since 2019. For example, construction spending increased by 8.7 percent between March 2023 and March 2024.

Public construction slipped 0.2 percent from February and rose 4.7 percent from March 2024. A year earlier, public construction jumped 13.1 percent from the March 2023 total. Of the three largest public construction categories, highway and street construction fell 0.5 percent in March, while spending on educational and transportation facilities each declined 0.6 percent.

Private nonresidential construction decreased 0.4 percent for the month. The year-over-year increase totaled 1.6 percent, down from 7.3 percent a year earlier. Spending on the largest private segment, manufacturing plants, slipped 0.4 percent in March. Private power construction spending inched down 0.1 percent. Commercial construction—warehouse, retail, and farm projects, declined 1.0 percent.

Private residential construction fell 0.4 percent for the month, dragged down by a 1.2 percent decrease in improvements to owner-occupied homes, while single-family homebuilding edged up 0.1 percent. Multifamily construction was flat. Private residential construction climbed 2.8 percent year-over-year, a slowdown from the 7.6 percent gain from March 2023 to March 2024.

Association officials said that the Trump administration’s focus on expediting federal reviews and permitting should help accelerate public-sector construction activity as many large-scale projects move from the approval to the construction phase. They added that they were working with the administration to explore ways to mitigate the impacts of tariffs on many key construction materials.

“Federal officials are moving to complete key reviews and issue permits for vital infrastructure projects in a more-timely way, which should help boost public-sector demand for construction,” said Jeffrey D. Shoaf, the association’s chief executive officer. “Finding ways to eliminate uncertainties and keep prices from escalating during trade disputes will also help boost private-sector demand.”