Building & Construction
March 31, 2026
Nonresidential construction spending stalls, hiring slows
Written by Stephanie Ritenbaugh
Total nonresidential construction spending was virtually unchanged in January, according to an Associated Builders and Contractors (ABC) analysis of the most recent data published by the US Census Bureau.
On a seasonally adjusted annualized basis, nonresidential spending totaled $1.245 trillion, ABC reported.
Nonresidential construction carries greater relevance for aluminum demand.
Importantly, the data was collected before the start of the US/Israeli conflict in Iran, which is spiking the price of oil and materials, as well as overall economic uncertainty.
Spending was down on a monthly basis in nine of the 16 nonresidential subcategories, ABC found. Private nonresidential spending was down 0.4%, while public nonresidential construction spending was up 0.6% in January.
“Private non-residential construction spending contracted for the fourth consecutive month in January and is now down 8% from the December 2023 all-time high,” ABC Chief Economist Anirban Basu said in a statement. “While harsh winter weather likely bears some blame, the major issue is the ongoing decline in computer/electronic manufacturing construction. With CHIPS Act-incentivized megaprojects wrapping up, spending in that subcategory is down nearly 40% over the past 18 months.”
Data center spending is still driving much of the activity in the sector.
“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,” said Basu.
“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,” Basu continued.
Construction starts
Dodge Construction Network saw a rebound in projects entering the planning phase in February. While total construction starts declined 13.2% to a seasonally adjusted annual rate of $1.08 trillion, non-residential building starts rebounded by 17.8%.
“After a weak start to the year, non-residential and residential building starts steadily rebounded throughout February,” stated Sarah Martin, associate director of forecast at Dodge. “Conversely, nonbuilding activity slowed down last month – normalizing from elevated levels in January.”
Still, it’s offices and data center planning that seems to be driving the activity.
Commercial starts were up 48.5%, solely driven by the 159.6% month-over-month growth in offices and data centers, Dodge reported. Meanwhile, planning for structures such as stores, parking garages, hotels (-7.9% m/m) and warehouses all lost pace throughout February.
Healthcare construction continued to pull back, dropping 46.6% m/m. After a strong January, manufacturing construction also slowed down, pulling back 54.1%, Dodge said.
Hiring slows
The construction industry had 202,000 job openings on the last day of February, according to ABC’s analysis of data from the US Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS).
JOLTS defines a job opening as any unfilled position for which an employer is actively recruiting. Industry job openings decreased by 28,000 in February and are down by 53,000 from the same time last year.
“Construction hiring fell to the slowest rate on record in February,” said Basu. “At the same time, contractors remained reluctant to lay off workers while employees were even more reluctant to leave. The combination of historically slow hiring and exceedingly few separations made February 2026 the month with the least construction labor force churn since the BLS began this survey in December 2000.”
“Of course, this data pertains to February, when the Strait of Hormuz was open and the price of oil was under $100 per barrel,” Basu added.
