Arlington, VA – Construction spending reached a record level of $1.309 trillion in May as monthly increases in residential and public investment outweighed a decline in private nonresidential outlays, according to an analysis of new government data by the Associated General Contractors of America. Association officials warned, however, that continued labor shortages and rising materials costs threaten future growth in demand.
Construction spending in May increased 0.4 % from the rate in April and 4.5 % from the May 2017 rate to $1.309 trillion at a seasonally adjusted annual rate. For the month, public construction spending rose 0.7 %, private residential spending increased 0.8 %, and private nonresidential construction spending slipped 0.3 %. On a year-over-year basis, public construction spending climbed 4.7 %, private residential spending grew 6.6 %, and private nonresidential construction spending edged up 1.8 percent.
Among public infrastructure spending categories, highway and street construction increased 5.8 % from May 2017 to May 2018; transportation construction (airports, transit, public rail and ports) rose 9.1 %; sewage and waste disposal construction climbed 5.6 %; water supply, 9.4 %; and conservation and development, 8.5 %. The largest public building construction type—educational construction—inched up 0.4 % over the year.
Association officials noted that rapidly rising materials costs, due in part to new and anticipated tariffs, are likely to make some projects unaffordable. In addition, acute shortages of qualified labor may result in project delays, Stephen E. Sandherr, the association’s chief executive officer, cautioned. He urged Congress to pass a new Perkins Act that increases funding for career and technical education and for the Trump Administration to avoid a damaging trade war.