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
Industry Research | Nov 28, 2017
2018 outlook: Economists point to slowdown, AEC professionals say ‘no way’
Multifamily housing and senior living developments head the list of the hottest sectors heading into 2018, according a survey of 356 AEC professionals.
Market Data | Nov 27, 2017
Construction's contribution to U.S. economy highest in seven years
Thirty-seven states benefited from the rise in construction activity in their state, while 13 states experienced a reduction in activity.
Market Data | Nov 15, 2017
Architecture Billings bounce back
Business conditions remain uneven across regions.
Market Data | Nov 14, 2017
U.S. construction starts had three consecutive quarters of positive growth in 2017
ConstructConnect’s quarterly report shows the most significant annual growth in the civil engineering and residential sectors.
Market Data | Nov 3, 2017
New construction starts in 2018 to increase 3% to $765 billion: Dodge report
Dodge Outlook Report predicts deceleration but still growth, reflecting a mixed pattern by project type.
Market Data | Nov 2, 2017
Construction spending up in September; Down on a YOY basis
Nonresidential construction spending is down 2.9% on a year-over-year basis.
Market Data | Oct 19, 2017
Architecture Billings Index backslides slightly
Business conditions easing in the West.
Industry Research | Oct 3, 2017
Nonresidential construction spending stabilizes in August
Spending on nonresidential construction services is still down on a YOY basis.
Market Data | Sep 21, 2017
Architecture Billings Index continues growth streak
Design services remain in high demand across all regions and in all major sectors.
Market Data | Sep 21, 2017
How brand research delivers competitive advantage
Brand research is a process that firms can use to measure their reputation and visibility in the marketplace.