Spending on most categories of nonresidential and multifamily construction declined from February to March as contractors struggled to find workers and materials, according to the Associated General Contractors of America’s (AGC) analysis of federal spending data.
AGC officials urged Washington to end tariffs on construction materials and widen training opportunities.
“Contractors continue to report strong demand for most types of structures, with few owners cancelling or postponing planned projects,” said Ken Simonson, the association’s chief economist.
“But worker shortages and supply-chain problems, from lockdowns in China to the war in Ukraine, are slowing project completions.”
Construction spending in March totalled $1.73 trillion at a seasonally adjusted annual rate, 0.1% above the upwardly revised February rate and 11.7% higher than in March 2021.
Private residential construction spending accounted for all of the increase in the latest month, rising 1.0% for the month and 18.4% from March 2021.
In contrast, private nonresidential construction spending slumped 1.2% from February, although the March total was 8.5% higher than in March 2021. Public construction spending slipped 0.2% for the month but increased 1.7% from the year-ago level.
There were notable monthly declines in the largest private nonresidential categories despite generally robust growth from a year earlier. The largest private nonresidential segment, power construction, slipped 1.2% for the month to a level 0.3% below the March 2021 rate.
The next-largest segment, commercial construction, fell 1.9% in March but gained 15.5% year-over-year. Manufacturing construction fell 1.6% in March but topped the March 2021 rate by 31.8%.
The largest public segments also slipped in March. Highway and street construction declined 0.4% from February but rose 7.5% compared to March 2021.
Educational construction tumbled 0.8% for the month and 6.2% year-over-year. Transportation construction spending slid 0.5% in March and 1.2% year-over year.
AGC officials urged President Biden to end tariffs that are restricting supplies and raising prices for lumber, steel, and aluminium products. To improve the labour supply, they called for more funding of career and technical education and recognition of a broader range of apprenticeship programmes.
“Now that Congress has funded a substantial increase in infrastructure construction, it is imperative that the supply of materials and workers be increased as well,” said Stephen E. Sandherr, AGC chief executive. “Congress and the administration need to act promptly on several fronts.”
Further reading:
