Nonresidential Construction's Steady Decline

Construction Trend Tuesday (#29)

Construction Trend Tuesday covers one (hopefully) interesting industry trend in a quick, two minute read. You can access the archive of CTT posts here.

Private nonresidential construction spending has steadily fallen since peaking in December 2023.

Declines have been widespread, with all but two segments down over that 20-month period.

There are several factors at play here. Materials prices surged during 2022 and 2023. The warehouse boom started to slow. Labor shortages didn’t help.

Most of the blame goes to interest rates, though, which started rising in early 2022 and, by December 2023, had attained a multi-decade high.

Even with the Fed cutting rates a few times since Q3 2024, borrowing costs remain too high. Tariffs and uncertainty aren’t helping. Which is to say, it could be a while before private nonresidential activity rebounds.

What’s Next

We get a new Producer Price Index release this morning, and that will provide a much-needed update on materials prices. We’ll cover that and a whole lot more in Week in Review, our every-Friday post that covers all the economic news and data in a breezy, five-minute read.

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