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The total construction spending forecast, now at $2,237bil, +3.7%, has been lowered a bit since the Outlook in Feb. ($2,272bil, +5.5%). Most of the reduction is in Residential which was reduced from $997bil, +7.2% down to $958bil, +3.0%. Nonres Bldgs was reduced by $11bil and Nonbldg increased by $7bil. Compared to the average for the year 2024, current total spending YTD is up 2.6%, but is expected to pick a little up throughout the year across all sectors. <\/p>\n
Manufacturing is still the largest $ contributor to nonresidential bldgs spending ($22bil\/yr), but has fallen slightly in 3 of the last 4 months. The trend is down in most months for 2025 and down in 2026 This decline is entirely expected and you can read about it in my article, The Manufacturing Taper.<\/strong> Data Centers shows the largest % growth for 2025, forecast +39%, continuing on a phenomenal streak of +45% in 2023 and +56% in 2024. Manufacturing spending peaked in Oct\u201924. Data Center spending continues to increase for the next few years. Both of these forecasts take into account some cancelations or delays announced recently (see Briefs), however do not account for any major stoppages due to recent trade impacts.<\/p>\n The largest $ increases in spending are Power, forecast to increase +$16bil, and Highway +$13bil. Educational spending is forecast to post the largest nonres bldgs $ growth in 2025 (+$12bil, +9%).<\/p>\n Typical jobs growth is 2.5% to 3.5% per year, even though spending can sometimes far outpace that. But jobs growth doesn\u2019t track spending, it tracks volume growth. Volume is spending minus inflation. For example, for the 4 years 2021 thru 2024, spending increased 44%. But inflation increased 33%. Volume growth was only 11%. Jobs increased 12.5%. For 2025, Inflation will outpace spending growth by 1%, but jobs are still expected to increase by 1.5%. Rarely do jobs decrease.<\/p>\n New starts are forecast up in 2025, but I would caution there are a lot of headwinds that could slow new starts growth. Many economists predict the current trade impacts will slow overall economic growth. That in turn could slow capital expenditures, which, in this case, is new construction starts. So far year-to-date, spending is outpacing new starts growth. That means backlog is decreasing, mostly in nonresidential buildings. We haven\u2019t seen a decrease in Nonres Bldgs backlog since pre-2011. Residential backlog is down slightly. Nonbuilding is increasing. <\/p>\n See Also Construction Briefs May\u00a02025<\/strong><\/p>\n I\u2019ve increased the inflation outlook since Feb to a range of 4.5% to 5%. Inflation may be the most uncertain of all factors affecting construction this year. We have yet to see any significant impact from tariffs, and there is sure to be impacts to many construction inputs. We may not know the total impact for several more months. But I would expect, if anything, inflation will go up from here, not down.<\/p>\n The bees are swarming the flowers outside. At least some lifeform is content and at peace with this world.<\/p>\n<\/p><\/div>\n