Construction Machinery Manufacturers NAICS 333120

Nov 7, 2025 - Nonresidential Construction Conditions Weaken

• During a webinar in October, Associated Builders and Contractors (ABC) chief economist Anirban Basu warned of tightening conditions for the U.S. construction industry, with rising interest rates, material costs, and financing challenges threatening project viability, according to Construction Dive. While data center construction remains strong, driven by investments in AI infrastructure, other sectors, such as commercial, manufacturing, and public infrastructure, are cooling due to tariffs, saturated markets, and dwindling government funding. Contractors outside the data center space report shrinking backlogs and reduced deal flow. The expiration of federal infrastructure funding in 2026 may further dampen demand.
• North American construction and engineering spending in 2025 is expected to decline 1% after increasing an estimated 6% in 2024, according to FMI’s fourth-quarter 2025 North American Engineering and Construction Outlook. With a rise of 12%, the sewage and waste disposal sub-sector will lead 2025 nonresidential construction spending growth, followed by religious (10%), water supply (+7%), conservation and development (+5%), amusement and recreation (+4%), public safety (+4%), and transportation (+4%). However, spending on power, highway, and street construction is expected to remain flat in 2025. Residential construction spending is expected to decline 2%. Multifamily construction is expected to decrease by 9% in 2025, amid oversupply in some key markets and weak rent growth. Single-family construction is projected to drop 3% in 2025, as stubbornly high interest rates and elevated home prices reduce demand.

• Demand for building design services fell in September from the prior month, according to an October report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) dropped to 43.3 compared to August’s reading of 47.2. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries dropped to 50.1 in September from 50.3 in August, and the index for the value of new design contracts decreased from 47.2 to 46.3. September marked the 19th consecutive month of decline for new design contracts. The AIA’s Chief Economist, Kermit Baker said, "Unfortunately, business conditions remain relatively weak at architecture firms. There was some erosion in project backlogs this past quarter, with the greatest slippage coming from firms with an institutional specialization."
• Machinery manufacturers Caterpillar and Deere discussed the impact of tariffs and other economic headwinds during their recent earnings calls, according to Reuters. The two firms are struggling to absorb costs related to shifting US trade policy amid weaker demand and high interest rates. Caterpillar noted that margins would be pinched as tariffs push up costs for imported components and materials. Caterpillar has estimated tariffs could add $1.5 billion to its costs in 2025. Deere also warned of rising costs for steel and other inputs. Global economic uncertainty and high interest rates have also softened demand for some types of equipment as buyers tap the brakes on large capital outlays. Caterpillar said steadier demand for its engines, turbines, and locomotives used in the power generation and rail industries would help offset weaker market conditions in construction and mining.