US construction spending stalls (theconstructionindex)

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Growth in residential work in the USA in July and August was negated by a decrease in other areas of construction.

Ken Simonson
Ken Simonson

Furthermore, work in most of the infrastructure categories, such as highway construction, declined in the first eight months of 2021 compared to the same period last year, according to a new analysis of federal construction spending data carried out by Associated General Contractors of America (AGC)

Association officials urged the House of Representatives to approve the bipartisan infrastructure bill that passed in the Senate earlier this year.

“Nearly every non-residential spending segment has deteriorated from already inadequate 2020 levels in the first two-thirds of this year,” said Ken Simonson, the association’s chief economist. “Meanwhile, soaring materials costs mean that fixed public budgets buy even less infrastructure than before.”

Construction spending in August totalled US$1.58 trillion at a seasonally adjusted annual rate, virtually unchanged from July. Year-to-date spending increased 7.0% from the total for January-August 2020 but the gains were limited to residential construction.

Non-residential construction spending slipped in August and year-to-date. The residential construction segment climbed 0.4% for the month and 26% year-to-date. Combined private and public non-residential construction spending dropped 0.4% compared to July and 6.7% over the first eight months of 2021 compared to same interval in 2020.

Most infrastructure categories posted significant year-to-date declines, said Simonson. The largest public infrastructure segment, highway and street construction, was 3.4% lower than in January-August 2020. Spending on public transportation construction slumped 6.5% year-to-date. Investment in sewage and waste disposal structures climbed 3.8%, while funding for public water supply projects slid 1.8% and conservation and development construction plunged 18%.

Other types of non-residential spending also decreased year-to-date, Simonson added. Combined private and public spending on electric power and oil and gas projects declined 3.6%. Education construction slumped 10.6%. Commercial construction–comprising warehouse, retail, and farm structures–dipped 1.7%. Office spending fell 10.1% and manufacturing construction edged down 0.8%.

Association officials said the nearly universal decline in infrastructure spending demonstrates the urgency of enacting expanded funding for a range of infrastructure project types. They called on the House of Representatives to quickly pass the bipartisan Infrastructure bill that already passed in the Senate by a wide margin.

“This legislation includes the kind of policy priorities that members of both parties have long claimed to support,” said Stephen E. Sandherr, the association’s chief executive officer. “There is no excuse for holding these projects hostage while sorting out other priorities. Construction workers, businesses, and the public are all losing from delay in passing this legislation.”

 

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