Dive Brief:
- Nonresidential construction spending dipped 0.6% month to month in December due to a slowdown in factory builds, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data.
- Private and public nonresidential construction ticked down 0.7% and 0.4% month to month, respectively, in December, according to the report. Twelve of the 16 nonresidential subcategories posted declines in December, with the monthly drop mostly driven by manufacturing construction.
- “This decline was concentrated in the manufacturing segment, which is now down nearly 16% from the August 2024 all-time high,” said Anirban Basu, ABC chief economist. “Given trade policy uncertainty and the waning effects of the CHIPS Act, manufacturing-related spending will likely continue to decline over the next several quarters.”
Dive Insight:
The weak spending report follows a similarly soft backlog reading, where jobs on contractors’ books recently fell to a four-year low, noted Basu.
Spending on manufacturing construction, the largest subcategory for nonresidential construction, dropped 2.5% month to month in December, according to ABC. Despite President Donald Trump’s pledges to increase U.S. based manufacturing, construction spending in the sector has decreased for 11 consecutive months, reports the Wall Street Journal. Manufacturing groups have said uncertainty around U.S. tariff policy has impinged on long-term investment decisions.
The soft spending numbers weren’t limited to manufacturing, however.
“While manufacturing is the most significant driver of nonresidential weakness, it’s far from the only one,” said Basu in the release. “Eight of the 11 private nonresidential subsegments contracted in December, and total private nonresidential spending is now down 1.8% year over year.”
An Associated General Contractors of America report noted the 11.4% plunge in manufacturing construction over the past 12 months as the primary headwind on private nonresidential spending.
Expenditures on highway and street projects, the third largest subcategory, also tumbled 0.4% month to month to close the year, according to the report.
On a positive note, spending on power construction projects, the second largest subcategory, led all segments to close the year, ticking up 0.8% month to month. Spending on office construction also improved in December, up 0.4% month to month, according to the data.
