The U.S. Census Bureau released its monthly construction spending report on March 23, an unexpected decline during January, weighed down by private construction.

The Bureau’s report shared that January total construction spending was estimated at an adjusted annual rate of $2.19 trillion, 0.3% below December’s revised estimate, but up 1.0% year-over-year. Following a 0.8% jump in December, the January decline missed market expectations of a 0.1% gain.

Private construction spending of $1.661 trillion was down 0.6% from December’s revised total and down 0.1% year-over-year, while public construction spending of $529 billion was up 0.6% month-over-month and up 4.5% year-over-year.

Total U.S. Construction Spending: MoM % Change

Total residential spending of $945.15 billion was down 0.8% month-over-month and up 2.3% year-over-year, while total nonresidential spending of $1.245 trillion was flat month-over-month and down 0.1% year-over-year.

January spending was down month-to-month in 9 of the Bureau’s 16 subcategories for nonresidential construction.

Private Construction — Residential vs. NonRes

Within January private construction spending, residential was down 0.8% month-to-month and nonresidential was down 0.4% — with the latter being its fourth straight decline. Within private nonres, spending was down in 6 of its 11 subcategories.

“While harsh winter weather likely bears some blame, the major issue is the ongoing decline in computer/electronic manufacturing construction,” Associated Builders & Contractors Chief Economist Anirban Basu said in the firm’s analysis of the Bureau data. With CHIPS Act-incentivized megaprojects wrapping up, spending in that subcategory is down nearly 40% over the past 18 months.”

Basu also noted that private nonres construction spending is now down 8% from its December 2023 all-time high.

“With the exception of data centers, which saw another 2% jump in spending during January, there are few sources of momentum to offset the precipitous decline in manufacturing construction activity,” Basu added. “This lackluster performance is especially concerning in light of the ongoing conflict in Iran, which will ignite materials price escalation and heighten already elevated levels of economic uncertainty.

Public Construction

Within public nonres construction, spending decreased in eight of its subcategories, but those declines were more than offset by a 3.3% gain in the subindex for highway and street that represents nearly 29% of total nonres spend.