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Dive brief:
- Expenditure on non-residential construction It was flat month over month in October and down nearly 1 percent year over year, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data.
- The construction expense report was the first since november due to the government shutdown, and showed relatively little change from recent spending patterns at the end of 2025.
- “Non-residential construction spending did not pick up momentum at the start of the third quarter of 2025,” ABC chief economist Anirban Basu said in the report. “While there are few sources of private non-residential growth outside the data center category that are still growing, much of the recent decline in construction spending is due to a precipitous drop in manufacturing investment.”
Diving knowledge:
Manufacturing construction spending, down 1%, led the monthly decline, followed by a 0.4% drop in office construction.
“With the collapse of megaprojects enabled by the CHIPS Act and strong trade policy headwinds, manufacturing construction spending has fallen nearly 10% over the past 12 months,” Basu said in the statement.
The twist shows how the manufacturing construction, which was a beloved of non-residential contractors during the Biden era, it has been rapidly replaced by data center builds and the gravitational pull they have had on the sector over the last year. The shift highlights the inherent ebb and flow of construction booms.
Global private non-residential spending fell 0.2% in October, according to ABC analysis.
However, contractors remain optimistic about the first half of 2026, Basu said.
Officials from the Associated General Contractors of America said the results of the long overdue expense report align with the recent ones in the organization perspectives on the business of construction and contracting. This survey found that contractors were much less optimistic about growth prospects than they were a year ago.
“Our survey of contractors found widespread expectations of increased demand for data centers and energy projects, but expectations moderated for all other project types compared to the Outlook 2025 Survey,” AGC chief economist Ken Simonson said in the statement. “Overall, more contractors expect a decrease rather than an increase in spending across five project types, compared to just two negative readings a year ago.”
The AGC report pointed to negative construction expectations for schools and accommodation this year, groups that contractors expected would pick up in 2025. Sentiment around private office and retail construction also worsened in 2026 compared to last year.
AGC CEO Jeffrey Shoaf urged Congress in Wednesday’s release to pass the next surface transportation bill before the current legislation expires later this year. Other steps, such as cutting red tape, would promote a significant increase in construction spending, he said.
