National – Construction spending edged up 0.1% in August from July but declined from year-ago levels, with divergent trends in residential and nonresidential categories, according to an analysis by the Associated General Contractors of America of new federal spending data.
Association officials said that many contractors in its recent survey report that staffing challenges are causing projects to take longer than expected, which may be holding down spending. They urged government officials to boost funding for career and technical education and pass comprehensive immigration reform to ease the shortage of construction workers that is slowing projects.
Construction spending totaled $1.287 trillion at a seasonally adjusted annual rate in August, a gain of 0.1& from the July rate but 1.9% less than the August 2018 rate, according to estimates the U.S. Census Bureau. Year-to-date spending for January-August combined fell 2.3% from the year-ago total.
Public construction spending increased 0.4% for the month and 4.6% year-to-date. Among the three largest public categories, spending in the first eight months of 2019 climbed 10.8% compared to the same period in 2018 for highway and street construction spending, 0.9% for educational construction and 9.3% for transportation (airports, transit, rail and port) projects.
Private nonresidential spending decreased 1% from July to August and 0.1% year-to-date. Major private nonresidential segments experienced mixed year-to-date results. The largest—power construction (comprising electric power generation, transmission and distribution, plus oil and gas fields and pipelines)—climbed 6.2% year-to-date. Commercial (retail, warehouse and farm) construction plummeted 14.9%. Manufacturing construction posted a 3.7% gain. Private office construction spending rose 7.7%.
Private residential construction spending increased 0.9% for the month but slid 5% year-to-date. Single-family homebuilding rose 1.4% from July to August but decreased 8.4% year-to-date, while spending on multifamily projects was down 0.9% for the month but up 6.5% year-to-date. Spending on residential improvements increased 0.8% for the month but declined 6.4% year-to-date.
Association officials warned that project delays may worsen, noting that nearly three-fourths of the respondents to its survey expect it will be as hard or harder to hire hourly craft workers in the next 12 months, while 29% of firms are putting longer completion times into their bids or contracts to offset worker shortages. They urged government officials to act promptly to increase the supply of workers.