AGC Analysis Finds Construction Spending Down In August
Arlington, VA - Total construction spending declined by 0.7 percent in August as spending on new
houses turned sharply lower, while public and private nonresidential construction
posted mixed results, according to federal spending data analyzed by the Associated General Contractors
of America. Association officials said
that rising interest rates were hurting demand for housing and many private-sector
projects while the impacts of new federal funding for infrastructure, semiconductor
plants and green energy facilities have yet to fully kick in.
“The construction market is in a transition that is likely to accelerate in the
months ahead,” said Ken Simonson, the association’s chief economist. “Steeply
rising interest rates have crushed demand for single-family housing and threaten
developer-financed projects, while newly enacted federal legislation will soon
boost investment in power, manufacturing, and infrastructure construction. But
a pickup in these segments will require improvements in the timely approval of
projects and adequate supplies of workers and materials.”
Construction spending, not adjusted for inflation, totaled $1.78 trillion at a
seasonally adjusted annual rate in August, 0.7 percent below the upwardly revised
July rate. Spending on new single-family homes declined for the fourth month in
a row, falling by 2.9 percent from July. Spending on other residential segments
rose, by 0.4 percent for multifamily construction and 1.0 percent for improvements to owner-occupied housing.
Private nonresidential spending edged down 0.1 percent for
the month. The largest segment, power—comprising electric, oil, and gas projects—slipped
0.9 percent in August. Spending on commercial construction—warehouse, retail,
and farm projects—was flat. Manufacturing construction declined by 0.5 percent
in August but jumped 21.6 percent over 12 months. Spending on office construction,
which includes data centers, climbed 0.3 percent for the month.
Public construction spending decreased by 0.8 percent in August,
with declines for the three largest segments. Highway and street construction
spending fell 1.4 percent, while educational and transportation construction spending each decreased 0.4 percent.
Association officials said the benefits of recent new federal investments in construction
of infrastructure, manufacturing and energy production have been delayed by some
of the regulatory requirements associated with the measures. They also cautioned
that workforce shortages and ongoing supply chain problems could undermine the
sector’s ability to deliver federally funded projects and help rebuild in parts
of the southeast after Hurricane Ian.
“Federal
officials can shore up slowing demand for construction by moving more quickly
to fund new projects,” said Stephen E. Sandherr, the association’s chief executive
officer. “Meanwhile, boosting investments in construction training and education
programs will help ensure there are enough workers to rebuild after natural disasters
and modernize our infrastructure and energy and manufacturing sectors.”
About The Associated General Contractors Of America
The Associated General Contractors of America (AGC) is a leading association for the construction industry. AGC represents more than 26,000 firms, including over 6,500 of America’s leading general contractors, and over 9,000 specialty-contracting firms. More than 10,500 service providers and suppliers are also associated with AGC, all through a nationwide network of chapters. To learn more, visit www.agc.org.