Nonresidential Construction Spending Drops Sharply In July
National nonresidential construction spending decreased 0.2% in July, according to an Associated Builders and Contractors analysis of federal data.
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On a seasonally adjusted annualized basis, nonresidential spending totaled $1.24 trillion.
Spending was down on a monthly basis in 7 of the 16 nonresidential subcategories. Private nonresidential spending was down 0.5%, while public nonresidential construction spending was up 0.3% in July.
“Nonresidential construction spending fell for a third consecutive month in July and is now down 2.5% from the December 2023 record high,” said Anirban Basu, ABC chief economist. “With construction materials prices rising rapidly in recent months and set to continue as higher tariff rates go into effect, the recent decline in construction activity is even larger than this data series suggests.”
He notes that private nonresidential activity has declined at a particularly concerning pace over the past several months and fell another 0.5% in July.
“With the exception of the religious category, which represents less than 1% of private nonresidential construction activity, and the power category, which is surging due to data centers and their considerable energy needs, no private subsegment has retained momentum through the first half of 2025,” Basu said.
According to an ABC survey of its members, nearly 1 in 4 reported a project interruption or cancellation due to tariffs in July.
“That predates the particularly large import tax increases put into effect in early August,” he said. “With economic uncertainty still elevated, labor shortages reemerging and materials prices rising, it may be a bleak second half of the year for the construction industry.”
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