Construction spending showed modest growth in February, according to newly released data, but hiring and job openings in the sector appear to be losing steam — a trend that industry leaders say reflects cooling demand in several key markets.

The Associated General Contractors of America (AGC) announced Tuesday that construction spending increased by 0.7% from January to February, based on its review of two federal reports. While the uptick is a positive sign, AGC officials warned that workforce trends are pointing to a broader slowdown in activity.

“Construction spending rebounded in February, following widespread severe weather that may have slowed projects in January,” said Ken Simonson, chief economist at AGC.
“Investment remains positive compared to a year ago but the growth rate for all major categories has cooled, while contractors have trimmed hiring and slashed job openings,” he added.

Supporting this observation, a separate analysis by the Associated Builders and Contractors (ABC) found that there were 264,000 job openings in the construction sector at the end of February, according to data from the U.S. Bureau of Labor Statistics (BLS).

That figure is 22,000 higher than January, but significantly lower than the 429,000 openings recorded a year ago, indicating a dramatic shift in demand for labor.

“Construction industry hiring continued to pick up in February, accelerating to the fastest rate since the first half of 2024,” said Anirban Basu, chief economist at ABC.
“However, industrywide job openings remain subdued compared to this time last year. Still, there are signs that construction workers retain outsized leverage compared to their employers. Contractors remain reluctant to lay off workers, while construction workers quit their jobs at the fastest pace since last May,” he added.

Overall, year-over-year growth in construction spending remains positive but has slowed sharply. In February, total construction outlays reached $2.20 trillion at a seasonally adjusted annual rate, representing a 2.9% increase over February 2024. However, growth rates in both January (2.7%) and February (2.9%) were the slowest since 2019, according to Simonson.

Commenting on the hiring trends, Simonson noted the data suggests contractors are anticipating reduced labor needs in the near future — a potential sign of further slowdown in spending and project starts.

Residential and Nonresidential Breakdown

On the private residential side, spending increased 1.3% for the month, led by a 2.0% rise in improvements to owner-occupied homes and a 1.0% increase in single-family homebuilding, AGC officials said. Year-over-year, private residential spending grew 2.0%, which is significantly slower than the 7.9% annual growth seen from February 2023 to February 2024.

Meanwhile, private nonresidential construction posted a more modest gain, rising 0.4% in February with upticks reported across nearly all segments. The year-over-year increase came in at 2.5%, a marked deceleration from the 9.3% gain recorded in the previous year.

In contrast, public construction saw more modest movement, rising just 0.2% from January but showing a 6.0% increase over February 2024. That’s down from the 14.0% surge recorded between February 2023 and February 2024, underscoring how public infrastructure growth has slowed over the past year.

Regulatory Hurdles and Policy Efforts

To help revive momentum in public projects, AGC officials said they are working with the Trump administration and Congress to address bureaucratic delays that can stifle infrastructure development. Streamlining regulations, they said, could give a much-needed boost to public sector construction.

“We are working closely with administration officials to streamline the environmental permitting process and eliminate needless regulatory burdens,” said Jeffrey H. Shoaf, CEO of AGC.
“There is a way to hold projects to the same high standards of environmental protection without delaying decisions for years at a time,” he added.

As the construction industry navigates slower hiring trends and tighter margins for growth, economists and contractors alike are watching closely for signs of stabilization — or further softening — in the months ahead.

Originally reported by Ethan Duran in The Daily Reporter.