Dive Brief:
- Nonresidential construction spending stayed flat month over month in October and was down almost 1% year over year, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data.
- The construction spending report was the first since November due to the government shutdown, and showed relatively little change from recent spending patterns near the end of the 2025.
- “Nonresidential construction spending failed to gather momentum at the start of 2025’s third quarter,” Anirban Basu, ABC chief economist, said in the report. “While there are few sources of private nonresidential growth outside of the still surging data center category, much of the recent decline in construction spending is due to a precipitous drop in manufacturing investment.”
Dive Insight:
Spending on manufacturing construction, down 1%, led the monthly decline, followed by a 0.4% spending drop in office construction.
“With CHIPS Act-enabled megaprojects winding down and the stiff headwind of trade policy, manufacturing construction spending has fallen nearly 10% over the past 12 months,” Basu said in the release.
The turnabout shows how manufacturing construction, which was a darling of nonresidential contractors during the Biden era, has swiftly been supplanted by data center builds and the gravitational pull they’ve had on the sector over the last year. The shift spotlights the inherent come-and-go nature of building booms.
Overall private nonresidential spending decreased 0.2% in October, according to the ABC analysis.
Nevertheless, contractors remain upbeat about the first half of 2026, said Basu.
Associated General Contractors of America officials said the results of the long-delayed spending report align with the organization’s recent outlook on construction business and hiring. That poll found contractors were much less optimistic about growth prospects than they were a year ago.
“Our survey of contractors found widespread expectations of growing demand for data centers and power projects, but expectations are subdued for all other types of projects compared to the 2025 Outlook Survey,” said Ken Simonson, AGC chief economist, said in the release. “On balance, more contractors expect a decline rather than an increase in spending on five project types, compared to just two negative readings a year ago.”
The AGC report noted negative construction expectations for schools and lodging this year, groups that contractors had expected would increase in 2025. Sentiment around private office and retail construction also worsened in 2026 when compared to last year.
AGC CEO Jeffrey Shoaf urged Congress in Wednesday’s release to pass the next surface transportation bill before current legislation expires later this year. Other steps, such as cutting red tape, would promote a meaningful increase in construction spending, he said.
