Construction spending experienced a 0.5 percent decline from February to March, affecting all major nonresidential public and private categories. This figure is based on an analysis by the Associated General Contractors of America of a new government report. The decline occurs amidst growing concerns about the impact of tariffs and trade disputes on material prices and overall demand for new construction 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,” stated Ken Simonson, the chief economist of the Associated General Contractors of America. Simonson warned that spending has slowed over the past year, and as ongoing projects conclude, further declines in construction activity might occur over the coming months.
In March, spending was recorded at a seasonally adjusted annual rate of $2.20 trillion, a decrease of 0.5 percent from February and an increase of only 2.8 percent from March 2024. Notably, this represents the slowest year-over-year growth rate since 2019, whereas construction spending had grown by 8.7 percent between March 2023 and March 2024.
Public construction spending decreased by 0.2 percent from February, but increased 4.7 percent compared to March 2024. In contrast, a year prior, public construction had risen by 13.1 percent from the March 2023 figure. Within public construction, highway and street construction reduced by 0.5 percent, and spends on educational and transportation facilities each fell by 0.6 percent.
Private nonresidential construction spending dropped by 0.4 percent on a monthly basis, with a year-over-year increase of 1.6 percent—a decrease from the previous year’s 7.3 percent growth. Specifically, spending on manufacturing plants, the largest private segment, fell by 0.4 percent in March. Private power construction spending decreased slightly by 0.1 percent, and commercial construction, which includes warehouse, retail, and farm projects, decreased by 1.0 percent.
The private residential construction sector saw a 0.4 percent monthly decline, primarily due to a 1.2 percent drop in improvements to owner-occupied homes. However, single-family homebuilding registered a slight increase of 0.1 percent, while multifamily construction remained unchanged. Year-over-year, private residential construction climbed by 2.8 percent, down from 7.6 percent growth from March 2023 to March 2024.
Association officials expressed optimism that the Trump administration’s focus on streamlining federal reviews and permitting could speed up public-sector construction activity. They are also collaborating with the administration to find ways to address the tariff impacts on 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. He added, “Finding ways to eliminate uncertainties and keep prices from escalating during trade disputes will also help boost private-sector demand.”
