AGC: Construction Spending Declines in September

“Spending on projects has been slowed by shortages of workers and materials, as well as by extended or uncertain delivery times,” said Ken Simonson, the association’s chief economist. “And the extreme rise in materials costs is likely to mean some infrastructure projects will no longer be affordable without additional funding.”

Construction spending in September totaled $1.57 trillion at a seasonally adjusted annual rate, down 0.5% from August. Year-to-date spending in the first nine months of 2021 combined increased 7.1% from the total for January-September 2020. While both residential and nonresidential construction declined from August to September, the two categories have diverged relative to 2020 levels. Residential construction spending slipped 0.4% for the month but was 24.5% higher year-to-date. Combined private and public nonresidential construction spending decreased 0.6% in September and 5.8% year-to-date.

Most infrastructure categories posted significant year-to-date declines, Simonson pointed out. The largest public infrastructure segment, highway and street construction, was 1.3% lower than in January-September 2020. Spending on public transportation construction slumped 6.8% year-to-date. Investment in sewage and waste disposal structures was the sole exception, rising 4.3%. But public water supply projects dipped 0.9%, and conservation and development construction plummeted 19.5%.

Other types of nonresidential spending also decreased year-to-date, Simonson added. Combined private and public spending on electric power and oil and gas projects declined 2.5%. Education construction slumped 10.1%. Commercial construction – comprising warehouse, retail, and farm structures – dipped 1.7%, as a 13.2% plunge in retail construction outweighed a 12.0% hike in warehouse structures. Office spending fell 9.2% and manufacturing construction inched down 0.2%.

By Tim Triplett, Tim@SteelMarketUpdate.com