Nonresidential construction spending in the U.S. fell 0.5% from February to March 2025, according to data released by the Associated Builders and Contractors (ABC). Despite the monthly decline, spending remains 2.9% higher than in March 2024, largely due to continued investment in data centers.
Key Highlights:
- Nonresidential spending dropped 0.5% in March but is up 2.9% YoY.
- Private nonresidential spending fell 0.8% for the month, up 1.6% YTD.
- Public construction spending declined 0.2% for March, up 4.8% YTD.
- 11 of 16 nonresidential subcategories reported monthly declines.
- Data center construction was the primary growth driver, accounting for over 70% of annual spending gains.
- Manufacturing construction remains high but has weakened recently.
- High borrowing costs and tight credit conditions continue to suppress commercial construction.
Expert Commentary
ABC Chief Economist Anirban Basu emphasized the broad-based nature of the decline, pointing to widespread weakness in private-sector categories.
“Data center investments are perhaps the only remaining source of industry momentum,” said Basu. “Most commercial segments remain subdued under the weight of high borrowing costs and tight lending standards.”
He also warned that economic uncertainty, rising input costs from tariffs, and project delays or cancellations could further impact the industry in the coming months.
Despite these headwinds, ABC’s Construction Confidence Index in March still showed some optimism among contractors, though sentiment is expected to decline if market conditions worsen.
Conclusion
March’s downturn in construction spending highlights the growing strain on the nonresidential construction industry, as macroeconomic factors and sector-specific challenges weigh on investment. With data centers driving most gains, broader recovery may be limited in the near term.
