Construction spending has stopped growing. The Census Bureau’s July 1 release put May construction spending at a seasonally adjusted annual rate of $2,210.2 billion, up 0.1% from April’s revised $2,207.1 billion and 1.5% below May 2025. In real terms, after a year of near-double-digit materials inflation, that’s a shrinking market.
Private construction spending sags while public holds
The split tells the story. Private spending came in at $1.669 trillion, virtually unchanged from April and down 2.1% year over year. Public spending rose to $541.2 billion, up 0.5% for the month and 0.3% from a year ago. State DOT letting programs and federally funded infrastructure are doing the work private developers have stopped doing.
Residential was the month’s modest bright spot at $942.8 billion, up 0.4% from April and 1.8% year over year. Nonresidential spending of $1.267 trillion was flat for the month and down 3.8% from May 2025, the sharpest annual decline of any major segment.
A two-speed market shows up in the federal data
None of this will surprise anyone tracking the AGC’s mid-year outlook, which described a market where data centers, power and infrastructure grow while conventional commercial work stalls. The Census numbers put a federal stamp on it. Strip out the categories riding the AI buildout and the picture darkens: office outside of data centers, retail and lodging keep sliding.
The May figure also trails expectations. Economists had penciled in a slightly stronger month, and April’s number was revised down. Higher-for-longer borrowing costs and tariff-driven materials costs are a hard combination for private pro formas: projects that penciled at 2024 prices don’t pencil now.
What flat spending means for backlogs
A flat top line with 9-10% input inflation means physical volume is falling. That’s consistent with what contractors report: fewer bidders on megaprojects, more bidders on everything else, and margin pressure concentrated in the middle of the market.
The next read arrives August 1 with June data. Watch the public number. If state and municipal spending rolls over while private work is still soft, the two-speed market loses its faster gear.
The full release is at census.gov.