MSI Releases Q1 2025 Construction Economy Report

BOSTON, MA — MOCA Systems, Inc. (MSI), a leading construction planning and management firm has released its Q1 2025 “Today’s Construction Economy” report, providing in-depth analysis of the latest economic forces impacting the US nonresidential construction sector. The report examines softening spending growth, labor market shifts, and emerging risks from tariffs and immigration policies potentially impacting construction costs and project schedules.

"While the construction industry remains strong, firms must prepare for potential headwinds in 2025," said Brandon Michalski, Lead Construction Economist at MSI. "Ongoing labor shortages, supply chain volatility, and policy changes will require strategic planning to mitigate the impacts of higher project expenses and potential delays. "

Key Findings from the Q1 2025 Construction Economy Report include:

Labor Market Softening but Skill Shortages Persist

• • Construction job openings declined 39.2% YoY in November 2024.
  • Job quits fell 14.2% YoY, signaling reduced workforce mobility.
  • Despite market right-sizing, persistent skill shortages and tighter immigration policies are expected to drive up labor costs.

Material Orders Remain Steady, While Machinery Orders Soften Amid Tariff Uncertainty

• • New orders for construction materials remain stable, indicating continued levels of project activity.
  • Construction machinery orders softened YoY, indicating a potential slowdown in replacement cycle versus decline in starts.
  • Tariff enforcement could increase material costs and disrupt supply chains.

Construction Spending Normalizing After Years of Growth

• • Total U.S. construction spending grew 3.0% YoY in November 2024.
  • Nonresidential construction spending increased 2.8% YoY, while commercial sector spending declined 8.0% YoY.
  • Over $1 trillion in commercial real estate is set for refinancing in the next two years, potentially reshaping market dynamics.

Policy Shifts Under New Administration May Drive Costs Higher

• • Potential tariffs on steel and aluminum would increase material costs and extend project timelines or lead to cancellations altogether.
  • Stricter immigration policies may exacerbate labor shortages and drive wages up.
  • Construction firms must prepare for higher costs and potential project delays.
  • Despite short-term challenges, onshoring and expanding skilled trades are expected to drive long-term positive structural changes.

MSI’s Q1 2025 Construction Economy Report underscores the resilience of the construction sector but also highlights significant risks that could impact cost structures and project execution. As firms navigate this changing landscape, strategic planning, workforce development, and supply chain resilience will be critical to success.

The full report at mocaservices.com/wp-content/uploads/2025/01/1Q-2025-MSI-Construction-Quarterly-Report-01212025-FINAL.pdf.