Total construction spending fell for the fourth consecutive month in May, according to data released by the U.S. Census Bureau. Since April, spending fell 0.3%, while the year-over-year decline reached 3.5%.

“Uncertainty about tariffs, tax rates and labor availability are making it hard for many developers to risk moving forward with planned construction projects,” Ken Simonson, chief economist of the Associated General Contractors of America (AGC), said in a press release. “While public-sector demand remains solid, it just isn’t enough to offset the private-sector pullbacks in activity.”

The yearly decline marked the largest drop since 2019. Residential spending fell 6.5% year-over-year, while non-residential spending was down 1.1% in the same time period. On a monthly basis, spending in the residential and non-residential sectors fell 0.5% and 0.2%, respectively.

Anirban Basu, chief economist at Associated Builders and Contractors (ABC), expects the trend to continue through the remainder of 2025. “Given the many headwinds at play, including high interest rates, tight lending standards, elevated uncertainty and the effects of immigration and trade policy on labor and materials costs, spending may struggle to rebound during the second half of the year,” Basu said in statement.

This data looks absolutely terrible. It appears the AI and energy push isn’t a tide that is lifting all boats. Spending is down across many sectors. I wonder if we didn’t have the Biden Administration era bills would construction complete plummet into a recession? Don’t be fooled by the small percentages we are talking about a $2T construction market. I really hope the June print comes in better within some recovery or flat lining of this slow down if not we could see a nasty recession in construction. Which could mean access to cheaper capital to kick start demand again.