Data centres ‘the only source of momentum’ for flagging US non-residential spending

That is according to analysis of figures published by the US Census Bureau by Associated Builders and Contractors (ABC).

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Non-residential spending during the month totaled just under $1.3 trillion, down 0.5%, and dropped on a monthly basis in 11 of the 16 categories.

Private non-residential spending fell 0.8%, while public non-residential construction spending dropped by 0.2%.

ABC chief economist Anirban Basu “Non-residential construction spending fell sharply in March, with declines spread across virtually every private subsector. Data centre investments, which accounted for more than 70% of the increase in private non-residential construction spending between March 2024 and March 2025, are perhaps the only remaining source of industry momentum. Manufacturing construction, while still elevated, has wavered in recent months. Most commercial segments remain subdued under the weight of high borrowing costs and tight lending standards. Residential construction continues to slide.

“Given unprecedented economic uncertainty, spending is unlikely to rebound in the coming months,” said Basu. “While a majority of contractors surveyed in March were still optimistic about their future sales, according to ABC’s Construction Confidence Index, sentiment is likely to falter as the effects of tariffs begin to raise input prices and stall or cancel projects.”

Meanwhile, officials from the Associated General Contractors of America (AGC) noted that the decline in construction activity comes amid growing uncertainty about the impacts tariffs and trade disputes would have on materials prices and overall demand for new projects.

“Construction spending retreated in March, as media reports and corporate announcements suggest owners are hesitant to start new projects in light of uncertainty over tariffs, government funding, and other policy upheavals,” said, Ken Simonson, chief economist of the AGC. “Spending has slowed over the past year and as current projects wind down, there may be several months of declining construction activity.”

Construction employment slowing

Earlier this month, the AGC noted that fewer metro areas in the US added construction jobs in March 2025 as compared to a year ago. Employment increased in 192 or 53% of 360 metro areas year on year.

The AGC interpreted the figures as a potential sign that tariff uncertainty and tight labour markets are impacting demand for projects.

Simonson said, “In the past 12 months barely half of metro areas experienced an increase in construction employment, a notable slowing from last year. This may be a sign that investors and project owners are putting more investments on hold.”