July 2, 2025

Construction Spending Continues Monthly and Annual Decline in May

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The U.S. Census Bureau reported May 2025 construction spending at $2.14 trillion on a seasonally adjusted annualized basis, down 0.3% m/m from April, and down 3.5$ from May 2024. According to the Bureau, construction spending during the first 5 months of the year amounted to an estimated $842 billion, down 2.1% from $860 billion during the same period in 2024. 

Private construction spending amounted to $1.63 billion on a seasonally adjusted annualized basis, down 0.5% m/m. Residential construction and Nonresidential construction were down 0.5% m/m and 0.4% respectively. 

Public sector construction was $512 billion on a seasonally adjusted annualized basis, up 0.1% m/m. The data indicates that even segments deeply impacted by Biden era spending bills, such as highway construction are showing signs of slowing, with construction up only 0.3% m/m in May. 

Despite the doldrum report for May construction activity, Dodge Construction Starts data shows some signs of hope as May construction starts improved sharply on a monthly basis. According to Dodge, total construction starts were up 13% m/m to a seasonally adjusted rate of $1.16 trillion on an annualized basis. According to Dodge, non-residential building starts were up 18%, residential starts were up 2%, and nonbuilding starts were up 20%. 

In the nonbuilding sector, utility starts grew by a remarkable 102%, driven largely by the groundbreaking of the Sierra Solar Farm and Storage center in Fallon, Nevada. In the non-residential segment, commercial starts were up 28% driven by stronger retail, office and warehouse starts. Institutional starts were up and an additional 19%, but manufacturing starts were down 13% m/m. In the residential segment, single family starts continued to decline, decreasing 5% versus the previous month and down 9% year-to-date, while multifamily construction was up 15% m/m with year-to-date investment up 5%.