Construction spending experienced a decline for the third consecutive month in April, dropping by 0.4 percent from March and by 0.5 percent compared to the same period last year. This marks the first year-over-year decrease since April 2019, as reported by the Associated General Contractors of America based on a new government analysis. Officials from the association have expressed concerns that this downturn could negatively impact national competitiveness and economic growth.
Ken Simonson, chief economist of the Associated General Contractors of America, stated, “A pullback in many types of private nonresidential projects, as well as a sharp drop in homebuilding, contributed to the latest drop in construction spending.” He added that uncertainty surrounding tariffs on key construction inputs and potential retaliatory actions from U.S. trading partners are causing hesitation among project owners.
The total spending reached $2.15 trillion at a seasonally adjusted annual rate in April, which is 0.4 percent below March's revised rate and 0.5 percent less than April 2024's figures. The decline followed decreases of 0.8 percent in March and 0.7 percent in February.
Private nonresidential construction decreased by 0.5 percent for the month, with a year-over-year increase of only 1.0 percent—the smallest since July 2021. Manufacturing plant spending fell by 0.6 percent, while private power construction dropped by 0.7 percent and commercial construction—comprising warehouse, retail, and farm projects—declined by 1.0 percent.
In terms of residential construction, there was a reduction of 0.9 percent for the month and a notable decrease of 4.8 percent from April last year. Single-family homebuilding decreased by 1.1 percent and improvements to owner-occupied homes fell by 0.8 percent; multifamily construction saw a slight dip of 0.1 percent.
Public construction increases helped mitigate some losses overall with public spending rising by 0.4 percent from March and up by 5.5% compared to April last year—driven mainly by highway and street constructions increasing by 0.5%, transportation facilities growing at an increase rate of about +o/o.o&7%. Educational structures witnessed minimal declines edging downwards ever so slightly (-O/-).
Association officials emphasized that frequent changes regarding announced tariffs make it challenging for owners/contractors alike when trying predict costs involved within future ventures while countermeasures enacted abroad further exacerbates problems causing postponements/cancellations amongst new endeavors altogether—they urged cautionary measures be taken avoiding imposing tariffs especially concerning crucial components such steel/aluminum/lumber which otherwise would exacerbate existing issues further still potentially hindering progress across board nationwide!
Jeffrey D Shoaf CEO commented: “Unless contractors/investors gain greater certainty concerning anticipated demands alongside corresponding expenses likely arise during process moving forward," he warned "private sector activity may continue decreasing resulting adverse effects upon United States’ competitive edge/economic outlook longer-term basis if left unchecked."