Latest Data Show Several Major Segments Stabilized or Increased in August; Association Notes Risks from Limited Labor Availability, Rising Materials and Interest Costs, and Delays in Federal Highway Funding
Construction spending increased by 0.9% from July to August but remained 1.7% below the August 2025 level, according to an analysis by the Associated General Contractors of America of a new government report released today. Association officials cautioned that the recent improvement in spending is at risk of stalling or reversing, particularly if Congress fails to act on a long-term highway funding bill as soon as possible.
“It is encouraging to see several construction segments stabilized or turned positive in August," said Ken Simonson, the association’s chief economist. “However, all of these categories remain at risk of stagnating or shrinking as workforce shortages continue to grow, materials costs and interest rates continue to increase, and gridlock in Congress continues to undermine federal funding for highway and transit programs.”
Construction spending totaled $2.20 trillion at a seasonally adjusted annual rate in August. That figure is 0.9% higher than the upwardly revised July rate and 1.7% below the August 2025 level.
Private nonresidential construction increased 1.0% in August but fell 1.0% compared to August 2025. The largest segment, manufacturing construction, was unchanged following a long string of declines, but remained 20% below the year-ago total. The next-largest category, power (including oil- and gas-related projects) rose 0.9% for the month and nearly 10% over 12 months. Private “office” construction, which includes data centers in the government release, jumped 4.6% from July and 30% year-over-year. But this apparent increase was due entirely to data-center construction, which soared 7.5% for the month and 73% over the past 12 months, while other private office construction was unchanged from July and down 9.4% from a year earlier.
Private residential construction rose 1.1% for the month but was 4.8% below the August 2025 level. Single-family construction edged up by 0.2% from July but was down 3.5% year-over-year. Multifamily construction also rose 0.2% for the month but remained 0.6% lower than one year earlier.
Public construction spending increased 0.2% from July and 2.5% year-over-year. The largest public category, highway and street construction, inched up 0.1% from July and was 4.4% higher than in August 2025. Public educational spending also rose 0.1% in August and increased 1.3% over 12 months. Public outlays for transportation facilities such as airports slipped 0.1% for the month but rose 4.4% from a year earlier. Spending on sewage and waste disposal structures climbed 0.2% from July and 1.3% year-over-year.
Association officials warned that the short-term federal highway funding extension that started today does not include funding for a couple of key programs, such as the Bridge Formula Program, which will lead to a decrease in federal infrastructure funding. They urged Congress to pass a new long-term bill promptly after Election Day.
“Congress is leaving until November without providing adequate funding for needed highway improvements,” said Jeffrey D. Shoaf, the association’s chief executive officer. “The current short-term extension leaves some programs short of money. Congress needs to make long-term legislation that includes sufficient funding a top priority when they return.”