ARLINGTON, VA – 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.”
