Construction spending decreased 0.5% from February to March with a pullback in all of the largest nonresidential public and private project types, according to a recent analysis of government data by the Associated General Contractors of America.
Association officials noted the decline in construction activity comes amid growing uncertainty about the impacts tariffs and trade disputes will have on materials prices and overall demand for new projects.
“Construction spending retreated in March, as media reports and corporate announcements suggest owners are hesitant to start new projects in light of uncertainty over tariffs, government funding, and other policy upheavals,” Ken Simonson, AGC chief economist, said in a news release. “Spending has slowed over the past year and as current projects wind down, there may be several months of declining construction activity.”
Spending totaled $2.2 trillion at a seasonally adjusted annual rate in March, AGC reported. The total was 0.5% below the February rate and only 2.8% above the March 2024 level. Simonson noted that was the slowest year-over-year growth rate since 2019. For example, construction spending increased by 8.7% between March 2023 and March 2024.
Public construction slipped 0.2% from February and rose 4.7% from March 2024. A year earlier, public construction jumped 13.1% from the March 2023 total. Of the three largest public construction categories, highway and street construction fell 0.5% in March, while spending on educational and transportation facilities each declined 0.6%.
Private nonresidential construction decreased 0.4% for the month. The year-over-year increase totaled 1.6%, down from 7.3% a year earlier. Spending on the largest private segment, manufacturing plants, slipped 0.4% in March. Private power construction spending inched down 0.1%. Commercial construction—warehouse, retail, and farm projects, declined 1.0%.
Private residential construction fell 0.4% for the month, dragged down by a 1.2% decrease in improvements to owner-occupied homes, while single-family homebuilding edged up 0.1%. Multifamily construction was flat. Private residential construction climbed 2.8% year-over-year, a slowdown from the 7.6% gain from March 2023 to March 2024.
Association officials said that the Trump administration’s focus on expediting federal reviews and permitting should help accelerate public-sector construction activity as many large-scale projects move from the approval to the construction phase. They added that they were working with the administration to explore ways to mitigate the impacts of tariffs on many key construction materials.
“Federal officials are moving to complete key reviews and issue permits for vital infrastructure projects in a more-timely way, which should help boost public-sector demand for construction,” AGC CEO Jeffrey D. Shoaf said. “Finding ways to eliminate uncertainties and keep prices from escalating during trade disputes will also help boost private-sector demand.”