US construction spending in May saw its biggest year-on-year slump in six years as developers delay or cancel projects amid confusion over US President Donald Trump’s policies on tariffs, labour and tax, employers group the Associated General Contractors of America (AGC) said yesterday.
May saw the fourth monthly spending decline in a row, dropping 0.3% from April and 3.5% from a year earlier. AGC said it’s the biggest fall since February 2019,
Public spending inched up 0.1% from April and 3.3% year-on-year, buoyed by a 0.1% increase in spending on educational structures and 0.6% on transportation facilities in May.
But that wasn’t enough to offset private sector declines, including private power construction (down 0.6% on the month), private nonresidential construction (down 0.4% on the month and 3.9% on the year), warehouse, retail, and farm projects (down 0.8% on the month), and private residential construction (down 0.5% on the month and 6.7% on the year).
“While public sector demand remains solid, it just isn’t enough to offset the private sector pullbacks in activity,” said AGC chief economist Ken Simonson.
AGC urged Congress and the Trump administration to avoid a large tax increase on construction, resolve trade disputes prompting the tariffs, allow people to enter the country to work in construction, and to invest in training.
The call comes a month after the US Immigration and Customs Enforcement agency (ICE) arrested more than 100 undocumented construction workers at sites around the Florida capital Tallahassee.
“The more certainty there is in the market, the more likely private sector developers will greenlight planned construction projects,” said Jeffrey D. Shoaf, the association’s chief executive officer.
“Washington officials can help provide that certainty by setting clear tax rates, resolving trade disputes and addressing significant construction labour shortages.
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