National nonresidential construction spending decreased 0.2% in July, according to an Associated Builders and Contractors analysis of data published Tuesday by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.24 trillion. Additionally, nearly one in four ABC members reported having a project interrupted or canceled due to tariffs in July.

Spending was down on a monthly basis in seven of the 16 nonresidential subcategories. Private nonresidential spending was down 0.5%, while public nonresidential construction spending was up 0.3% in July.

“Nonresidential construction spending fell for a third consecutive month in July and is now down 2.5% from the December 2023 record high,” ABC Chief Economist Anirban Basu said in a press release. “Of course, that’s in nominal terms. With construction materials prices rising rapidly in recent months and set to continue as higher tariff rates go into effect, the recent decline in construction activity is even larger than this data series suggests.

“Private nonresidential activity has declined at a particularly concerning pace over the past several months and fell another 0.5% in July,” said Basu. “With the exception of the religious category, which represents less than 1% of private nonresidential construction activity, and the power category, which is surging due to data centers and their considerable energy needs, no private subsegment has retained momentum through the first half of 2025.

Basu said the finding in ABC’s Construction Backlog Indicator survey that one in four members had a project interrupted or canceled in July due to tariffs “predates the particularly large import tax increases put into effect in early August.”

“With economic uncertainty still elevated, labor shortages reemerging and materials prices rising, it may be a bleak second half of the year for the construction industry,” he said.