With the longest federal shutdown in US history finally over, government agencies are slowly releasing delayed economic reports, painting a troubling picture for the construction sector. According to new figures analyzed by the Associated General Contractors of America (AGC), most major non-residential construction categories saw year-over-year declines in August, reinforcing industry concerns about inflation, tariffs, and persistent labor shortages.
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The AGC’s review shows that 10 out of 16 non-residential construction segments posted declines compared to August 2024. Private nonresidential spending slipped 0.3% from July, and fell 4% year-over-year, while residential building activity continues to show only marginal movement across the country. These figures arrive at a moment when contractors have been waiting months for updated federal guidance and real economic signals.
Industry officials worry that the shutdown has only intensified uncertainty. The lack of timely data has stalled investment decisions and delayed major public sector projects—especially those dependent on federal funding approvals. “Private and public sector construction owners are clearly being impacted by uncertainty about federal funding, material prices, and labour supply,” said Macrina Wilkins, the association’s senior research analyst.
Manufacturing construction dropped sharply, falling 1% from July and 8.5% year-over-year, while commercial building remained flat month-to-month but was down 8.9% from 2024. Multifamily spending decreased 7.1% year-over-year, and private residential spending, although up 0.8% in August, still declined 2% over the last year.
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However, one sector is not just stable — it is booming. Spending on data centers surged 26% year-over-year in August, reflecting the rapid expansion of artificial intelligence computing and the massive energy footprint behind it. Power construction dipped slightly month-to-month (0.2%), but it rose 2.1% year-over-year, likely tied to energy demand for data-intensive infrastructure.
Even with the modest uptick of 0.2% overall growth from July, total construction activity still remains 1.6% below August 2024, showing that broader market weakness persists beneath the isolated growth of digital infrastructure.
As contractors navigate unpredictable material prices and energy costs, AGC officials are renewing demands for immediate government action. The association is urging the Trump administration to offer economic clarity and avoid further disruption to America’s building sector.
AGC again pressed federal officials to “resolve outstanding trade disputes with countries like Canada and Mexico”, claiming that uncertainty over tariffs continues to inflate construction material costs. The group is also advocating for targeted labor relief, calling on lawmakers to support the bipartisan Essential Workers for Economic Advancement Act, which would unlock 65,000 work visas for industries — including construction — facing severe workforce shortages.
Wilkins asked whether better clarity from Washington could unlock stalled projects and revive investment. “The question is whether the reopening of the government will lead to a future bump in demand for construction.”
Originally reported by Rod Sweet in Global Construction Review.
