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Dive brief:
- Non-residential construction spending fell 0.6% month over month in December due to a slowdown in factory construction, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data.
- Private and public non-residential construction fell 0.7% and 0.4% month-on-month, respectively, in December, according to the report. Twelve of the 16 non-residential subcategories posted declines in December, with the monthly decline driven primarily by manufacturing construction.
- “This decline was concentrated in the manufacturing segment, which is now down nearly 16 percent from its August 2024 all-time high,” said Anirban Basu, ABC’s chief economist. “Given trade policy uncertainty and the trickle-down effects of the CHIPS Act, manufacturing-related spending will likely continue to decline over the coming quarters.”
Diving knowledge:
The weak spending report follows an equally soft backlog reading, where jobs on contractor books recently fell to a minimum of four yearsBasu pointed out.
Spending on manufacturing construction, the largest subcategory of non-residential construction, fell 2.5% month-on-month in December, according to ABC. Despite President Donald Trump’s promises to increase manufacturing in the United States, construction spending in the sector has decreased for 11 consecutive monthsreports the Wall Street Journal. Manufacturing groups have said so uncertainty about US tariff policy has affected long-term investment decisions.
However, the soft spending numbers were not limited to manufacturing.
“While manufacturing is the biggest driver of non-residential weakness, it is far from the only one,” Basu said in the statement. “Eight out of 11 private non-residential sub-segments contracted in December, and total private non-residential spending is now down 1.8% year-on-year.”
A report from the General Contractors of America pointed to the 11.4% decline in manufacturing construction over the past 12 months as mainly opposed to non-residential private spending.
Spending on highway and street projects, the third-largest subcategory, also fell 0.4 percent month-on-month to close out the year, the report said.
On a positive note, spending on electrical construction projects, the second largest subcategory, led all segments to close out the year, up 0.8% month-on-month. Office construction spending also improved in December, up 0.4% month-on-month, the data showed.
