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Nonresidential construction spending hits all-time high

Written By Alexis Nicols

road machinery parked

In February 2025, nonresidential construction spending climbed to an unprecedented $1.20 trillion annualized rate, marking a 0.4% increase from January and an impressive 11.7% jump compared to last year. According to data from the U.S. Census Bureau and analysis by Associated Builders and Contractors (ABC), the spike signals continued strength in commercial and public sector building, particularly in manufacturing, infrastructure, and public safety.

What’s behind the construction spending

The biggest contributor was manufacturing. Spending in this category shot up by 1.2% for the month, reflecting ongoing investment in domestic production capacity, especially in high-tech and clean energy sectors. Public safety, transportation, and sewage/waste disposal projects also saw significant gains, aligning with federal infrastructure initiatives.

“Nonresidential spending rebounded in February after declining in January,” said ABC Chief Economist Anirban Basu. “Despite ongoing labor shortages and high borrowing costs, contractors remain upbeat.” ABC’s Construction Confidence Index shows that most contractors expect their profit margins to remain stable or improve over the next six months.

Basu also noted that a sharp rise in highway and street projects partially accounted for the jump, which made up over 40% of the monthly gains. Public sector investment continues to lead the way, with spending up more than 6% compared to last year. On the flip side, private sector growth is lagging, rising just 2.5%—a pace that’s not even keeping up with inflation.

High interest rates, tighter lending rules, and uncertainty surrounding trade policies are likely to continue putting pressure on private sector construction in the months ahead. Even with those challenges—and the potential for rising material costs due to new tariffs—many contractors remain confident about the road ahead, with most expecting stable or even stronger business over the next six months. With federal and state funding flowing into public projects and private developers pushing forward on industrial builds, many experts predict a solid year for nonresidential construction spending. 

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