May 2025 Construction Spending Update

Q1 2025 Construction Spending Update (May 1 Data Release):

Construction spending was essentially flat over the past year, with growth matching the rate of inflation. Nonresidential spending declined 0.5% in Q1 2025, following broader economic softening—US GDP was down 0.3% in the first quarter. Residential spending remained stable, led by single-family construction, while multi-family activity stayed low but steady.

Key insights:

• After rapid growth in 2022 and 2023, key nonresidential drivers—Manufacturing, Data Centers, Roads, and Warehouses—have either plateaued or started to decline.
• Manufacturing construction has leveled off, with spending down 1.7% from its July 2024 peak. Growth in chemical and pharmaceutical segments may offer some offsetting momentum.
• Data center construction continues to support overall spending, though growth has slowed. Office construction, excluding data centers, remains in decline.
• Leading indicators from AIA suggest continued contraction in nonresidential construction through the remainder of 2025.

Looking ahead, market direction will depend heavily on broader U.S. economic conditions. Without a clear new growth driver on the horizon, the industry may face a period of modest contraction.

Get the full update here: May 2025 Construction Spending Update