Dive Brief:
- Nonresidential construction spending declined 0.1% in June to a seasonally adjusted annual rate of $1.241 trillion, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data released Friday.
- Private nonresidential construction fell 0.3%, though public nonresidential spending inched up 0.1% for the month. Spending dropped in June in nine of the 16 nonresidential subcategories, according to ABC.
- Spending has now contracted in six of the past seven months, a trend ABC Chief Economist Anirban Basu attributes to weak private activity and lingering macroeconomic headwinds.
Dive Insight:
June marked another step down for nonresidential construction, as developers pulled back amid a growing cloud of tariff and labor uncertainty, according to the Associated General Contractors of America.
“Employment growth in construction has slowed over the past year as uncertainty about tariffs and labor availability have caused owners to delay, stretch out, shrink and cancel projects,” said Ken Simonson, AGC chief economist, in the release. “As more structures that broke ground in past years reach completion, it is likely that industry employment growth will taper off even more.”
Spending on manufacturing projects, for example, fell 0.5% in June, according to the U.S. Census Bureau data. Commercial projects posted a 0.7% drop for the month.
But public construction has continued to cushion the downturn. Public nonresidential spending jumped 5.1% year over year, compared to a 4% decline in private nonresidential construction, according to ABC.
“Recent declines would be worse if not for the ongoing increases in public nonresidential spending,” said Basu in the release. “While ABC members remain optimistic about the second half of the year… recent data pertaining to both the construction industry and the broader economy suggest weakness could persist in the months to come.”
AGC officials urged President Donald Trump to continue completing trade agreements to provide greater tariff certainty for contractors, according to a news release. The Trump administration recently reached deal frameworks with multiple trading partners, including the European Union, Japan and South Korea.
The organization also pushed the administration to focus its immigration enforcement on undocumented individuals who are engaged in criminal activity to avoid additional disruptions to construction.
“The more uncertainty there is, the less likely developers are going to invest in significant new construction projects,” said Jeffrey Shoaf, AGC CEO, in the release. “The more this administration can do to provide economic certainty, the more likely demand for construction will rebound.”
