FMI Releases 2025 North American Engineering and Construction Outlook: Fourth Quarter

Total U.S. engineering and construction spending is forecast to decline 1% in 2025 after a 6% rebound in 2024. The market reflects late-cycle dynamics, with residential and manufacturing weakening in the short-term, while infrastructure and select institutional categories continue to advance.

Underperforming areas include rate-sensitive and consumer-driven sectors such as housing, retail, lodging and manufacturing. Rising borrowing costs, affordability challenges and weaker global trade conditions are suppressing activity.

Key takeaways include:

• Residential markets are where the impact of high borrowing costs and affordability constraints are most visible. Single-family construction spending is projected to decline 3% to $426 billion as payment-to-income ratios remain near record highs.
• Nonresidential buildings illustrate the uneven effects of shifting capital flows and structural change. Office spending is expected to increase 1% to $106 billion, but this masks a bifurcation: traditional office remains challenged by nearly 20% vacancy rates, while demand for data centers continues to surge.
• Infrastructure provides a counterweight with these investments being less sensitive to consumer demand and interest rates, creating dependable opportunities for contractors, engineers and financiers.

Download the full report for sector-specific insights and full forecast numbers.