Construction spending saw a modest increase of 0.7 percent from January to February, according to the Associated General Contractors of America's analysis of recent government data. Despite the uptick in spending, the industry is experiencing sluggish hiring and job opening rates, indicating contractors might anticipate fewer opportunities soon. This development follows a period of severe weather in January, which may have temporarily slowed construction projects.
"Construction spending rebounded in February, following widespread severe weather that may have slowed projects in January," stated Ken Simonson, chief economist of the Associated General Contractors of America. He added that although investment remains positive compared to the prior year, the growth rate for all major categories has decelerated, with contractors reducing hiring and job openings.
In February, spending reached a seasonally adjusted annual rate of $2.20 trillion. This figure was a 0.7 percent increase from January but only 2.9 percent higher than the same month in 2024. Simonson observed that year-over-year growth rates in January and February were the slowest since 2019.
A separate government report indicated that construction firms hired 354,000 workers in February, a seasonally adjusted decline of 5.3 percent or 20,000 workers from the prior year. The number of job openings by the end of February was 264,000, a decrease of 38 percent or 165,000 from a year earlier, with the job openings rate dropping to 3.1 percent, the lowest for February since 2018. Simonson interprets these statistics as a sign that contractors might anticipate needing fewer workers, potentially suggesting a future slowdown in spending.
Private residential construction spending increased by 1.3 percent for the month, with improvements to owner-occupied homes rising by 2.0 percent and single-family homebuilding by 1.0 percent. Year-over-year, spending rose by 2.0 percent, a decline from the previous year's 7.9 percent gain.
Private nonresidential construction saw a 0.4 percent increase for the month, with nearly all segments experiencing growth. The year-over-year rise was 2.5 percent, down from the previous year's 9.3 percent.
Public construction spending edged up 0.2 percent from January and showed a 6.0 percent increase from February 2024. This is a decrease from the 14.0 percent jump seen in public construction from February 2023 to February 2024.
In response to these trends, association representatives are engaging with the Trump administration and Congress to identify ways to reduce regulatory challenges and expedite approvals for new infrastructure projects. They argue that easing red tape could encourage more activity in publicly funded construction.
“We are working closely with administration officials to streamline the environmental permitting process and eliminate needless regulatory burdens,” said Jeffrey H. Shoaf, the association’s chief executive officer. “There is a way to hold projects to the same high standards of environmental protection without delaying decisions for years at a time.”