Stronger planning and project starts gave contractors a lift in May, but signs of strain deepened as policy headwinds took a firmer hold, according to the latest economic reports.
On the positive side, institutional projects, particularly in education and recreation, drove growth in nonresidential planning, while warehouse and hotel activity steadied the commercial side. Total groundbreakings rebounded 13% over April’s slowdown, offering some relief across the industry.
But the underlying picture still stands on somewhat uneven ground.
For example, private nonresidential spending dropped for a fourth straight month. Manufacturing activity, a once-booming construction sector, continued to fall. Backlog also slipped from a two-year high as more contractors reported tariff-related cancellations.
Meanwhile, recent raids from the U.S. Immigration and Customs Enforcement on jobsites raised fresh questions about the construction workforce. The most recent labor figures showed persistently low hiring and job openings.
On the financial side, contractors now face steeper material costs after new steel and aluminum tariffs took effect in early June. Prices for key materials like copper, iron and fabricated metals surged ahead of the hike, contributing to a 6% annualized increase in construction input costs.
Though profit margin expectations remained steady, economists warned that added supply pressure and policy uncertainty could undermine project pipelines in the second half of the year.
Here, Construction Dive rounds up the latest key economic data for builders.
