Construction and manufacturing are down. Should we be worried?
If you want to know where the economy is heading, watch construction and manufacturing. They’re strategic industries, critical to the U.S. economy and tied to interest rates, trade policy, and long-term productivity. Ramp’s data suggests both are now struggling.
Here’s data from Ramp’s Business Spend Nowcast. We use a stable sample of Ramp businesses, weighted by sector, size, and region to mirror the U.S. business universe, and track their spending over time. That gives a near-real-time read on which sectors are ramping up investment—and which are pulling back.
Ramp’s latest Nowcast shows construction and manufacturing are pulling back spend. Manufacturing spend fell 1.1 percentage points last month. Construction, which typically rises in the summer with better weather leading to an uptick in business, fell 3.1 percentage points.
These declines extend longer term declines in the sectors. Manufacturing spend is 15% lower than two years ago; construction is down 2% over the same period, per Ramp data (again, this should be up according to seasonal trends).
Public data shows similar trends. Census figures show construction spending fell 3% from June 2024 to June 2025. Ramp’s most recent data suggests those declines will extend further.
So what’s behind the decline? Real interest rates remain elevated even after a series of Fed rate cuts at the end of 2024, increasing the cost of borrowing and making large construction projects riskier and more expensive. Then there’s trade: we previously found that some businesses were pausing capital expenditures until tariff policy is clearly settled. Manufacturing and construction firms will have more adjustments to make, part of complex supply chains that rely more on imports, even for goods finished in the U.S (about 30% of U.S. manufacturing inputs are imported).
There are some bright spots. The construction and manufacturing sectors are also increasing their AI investments faster than any other sectors on Ramp’s platform.
But Ramp data shows these investments are concentrated in chatbots for knowledge work, and in software and APIs for engineers and planners. While these investments may increase productivity in some parts of the firms, particularly in planning and back-office work, they are a far cry from the robotics and Internet of Things (IoT) automation needed to deliver a real productivity revolution in construction and manufacturing.
Should we be worried about manufacturing and construction? Yes, unless the constraints change. With high borrowing costs and unsettled trade rules, buyers are deferring capital spending, which is exactly what Nowcast is picking up, and what Census data corroborates on a lag. If financing costs fall and trade policy stabilizes, the pullback should ease; if not, expect the weakness to persist even as firms keep adding AI to administrative workflows rather than to machines on sites and shop floors.
We dig into other spend trends by industry, business size, and more in our Q2 spending report.
→ Download the Summer 2025 Ramp Business Spending Report
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