Total construction spending edged higher in October, as gains in public and private project types outmatched decreases in single- and multifamily residential outlays, according to a new analysis of federal construction spending data the Associated General Contractors of America released today. Officials noted that public sector investments would likely rise in the near future because of the recently-passed infrastructure bill, but cautioned that labor shortages and supply chain problems were posing significant challenges for the industry.
“It is encouraging to see such a broad-based pickup in spending on nonresidential projects in the latest month,” said Ken Simonson, the association’s chief economist. “But the construction industry still faces major challenges from workforce shortages and supply-chain bottlenecks.”
Construction spending in October totaled $1.60 trillion at a seasonally adjusted annual rate, 0.2% above the September rate and 8.6% higher than in October 2020. Year-to-date spending in the first 10 months of 2021 combined increased 7.5% from the total for January-October 2020.
Among the 16 nonresidential project types the Census Bureau reports on, all but two posted spending increases from September to October. Total public construction spending rose 1.8% for the month, while private nonresidential spending inched up 0.2%. However, for the first 10 months of 2021 combined, nonresidential spending trailed the January-October 2020 total by 4.7%, with mixed results by type.
Combined private and public spending on electric power and oil and gas projects--the largest nonresidential segment--declined 0.6% for the month and lagged 2020 year-to-date total by 1.7%. But the other large categories all rose in October. Highway and street construction spending increased 2.4% for the month, though the year-to-date total lagged the same months of 2020 by 0.8%. Education construction rose 0.2% in October but trailed the 2020 year-to-date total by 9.2%. Commercial construction--comprising warehouse, retail, and farm structures--was nearly unchanged from September to October but was 1.9% higher for the first 10 months combined than in January-October 2020.
Residential construction spending declined for the second month in a row, slipping 0.5% from the rate in September. Nevertheless, the year-to-date total for residential spending was 24.2% higher than in the same months of 2020. Spending on new single-family houses decreased 0.8% for the month but outpaced the 2020 year-to-date total by 25.9%. Multifamily construction spending dipped 0.1% in October but topped the 2020 year-to-date total by 16.6%.
Association officials said that spending on many categories of public construction is likely to increase soon as the investments from the Bipartisan Infrastructure bill begin to flow. But they cautioned that the supply chain challenges and labor shortages were impacting construction schedules and budgets and prompting some owners to delay or cancel projects. They urged the Biden administration to explore new ways to relieve shipping delays and to invest more in career and technical education programs that serve as a pipeline into construction careers.
“Getting a handle on supply chains and encouraging more people to work in construction will go a long way in helping this industry recover,” said Stephen E. Sandherr, the association’s chief executive officer.
Related Stories
Higher Education | Apr 13, 2023
Higher education construction costs for 2023
Fresh data from Gordian breaks down the average cost per square foot for a two-story college classroom building across 10 U.S. cities.
Market Data | Apr 13, 2023
Construction input prices down year-over-year for first time since August 2020
Construction input prices increased 0.2% in March, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data released today. Nonresidential construction input prices rose 0.4% for the month.
Market Data | Apr 11, 2023
Construction crane count reaches all-time high in Q1 2023
Toronto, Seattle, Los Angeles, and Denver top the list of U.S/Canadian cities with the greatest number of fixed cranes on construction sites, according to Rider Levett Bucknall's RLB Crane Index for North America for Q1 2023.
Contractors | Apr 11, 2023
The average U.S. contractor has 8.7 months worth of construction work in the pipeline, as of March 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.7 months in March, according to an ABC member survey conducted March 20 to April 3. The reading is 0.4 months higher than in March 2022.
Market Data | Apr 6, 2023
JLL’s 2023 Construction Outlook foresees growth tempered by cost increases
The easing of supply chain snags for some product categories, and the dispensing with global COVID measures, have returned the North American construction sector to a sense of normal. However, that return is proving to be complicated, with the construction industry remaining exceptionally busy at a time when labor and materials cost inflation continues to put pricing pressure on projects, leading to caution in anticipation of a possible downturn. That’s the prognosis of JLL’s just-released 2023 U.S. and Canada Construction Outlook.
Market Data | Apr 4, 2023
Nonresidential construction spending up 0.4% in February 2023
National nonresidential construction spending increased 0.4% in February, according to an Associated Builders and Contractors analysis of data published by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $982.2 billion for the month, up 16.8% from the previous year.
Multifamily Housing | Mar 24, 2023
Average size of new apartments dropped sharply in 2022
The average size of new apartments in 2022 dropped sharply in 2022, as tracked by RentCafe. Across the U.S., the average new apartment size was 887 sf, down 30 sf from 2021, which was the largest year-over-year decrease.
Multifamily Housing | Mar 14, 2023
Multifamily housing rent rates remain flat in February 2023
Multifamily housing asking rents remained the same for a second straight month in February 2023, at a national average rate of $1,702, according to the new National Multifamily Report from Yardi Matrix. As the economy continues to adjust in the post-pandemic period, year-over-year growth continued its ongoing decline.
Contractors | Mar 14, 2023
The average U.S. contractor has 9.2 months worth of construction work in the pipeline, as of February 2023
Associated Builders and Contractors reported today that its Construction Backlog Indicator increased to 9.2 months in February, according to an ABC member survey conducted Feb. 20 to March 6. The reading is 1.2 months higher than in February 2022.
Industry Research | Mar 9, 2023
Construction labor gap worsens amid more funding for new infrastructure, commercial projects
The U.S. construction industry needs to attract an estimated 546,000 additional workers on top of the normal pace of hiring in 2023 to meet demand for labor, according to a model developed by Associated Builders and Contractors. The construction industry averaged more than 390,000 job openings per month in 2022.