Construction spending up in February, but hiring, openings start to slump

Construction spending ticked up in February but job openings and hirings are starting to slump, contractors said.

The Associated General Contractors of America on Tuesday reported project spending increased 0.7% between January and February in an analysis of two government reports. Industry officials said hiring shows signs of slowing as demand for most construction “cools.”

“Construction spending rebounded in February, following widespread severe weather that may have slowed projects in January,” said Ken Simonson, the 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.

There were 264,000 construction job openings on the last day of February, an Associated Builders and Contractors analysis showed. The association pulled data from the U.S. Bureau of Labor Statistics.

That number is up by 22,000 compared to last month but down by 165,000 the same time last year, ABC officials said.

“Construction industry hiring continued to pick up in February, accelerating to the fastest rate since the first half of 2024,” said Anirban Basu, the chief economist of 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.

Year-over-year growth last month was the slowest since 2019

In February, construction spending was at $2.20 trillion at an adjusted rate, 0.7% higher than in January but only 2.9% above the February 2024 level, AGC officials said. Year-over-year growth rates in January (2.7%) and February were the slowest since 2019, Simonson noted.

Commenting on the latest construction hiring numbers, Simonson said the figures showed contractors expected to need fewer workers in the future and was a sign spending may slow further.

Private residential construction rose 1.3% for the month, led by a 2.0% increase in improvements to owner-occupied homes and a 1.0% rise in single-family homebuilding AGC officials said. Spending rose 2.0% year-over-year, a slowdown from the 7.9% gain from February 2023 to February 2024, officials added.

Private nonresidential construction rose 0.4% for the month with pickups in nearly every segment, officials said. That was a 2.5% year-over-year increase, down form 9.3% a year earlier, officials added.

On the public side, spending edged up 0.2% from January and rose 6.0% from February 2024, officials said. A year ago, public construction jumped 14.0% from the February 2023 total, officials added.

AGC officials said they were working with the Trump administration and Congress to find ways to reduce regulatory burdens and cut down the time it takes to greenlight work on new infrastructure projects. Cutting red tape could help boost activity for many types of public construction projects, officials added.

“We are working closely with administration officials to streamline the environmental permitting process and eliminate needless regulatory burdens,” said Jeffrey H. Shoaf, chief executive officer 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.