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Construction Officials Note Spending Figures Foreshadow New Data the Association is Releasing Tomorrow Shoring the Ongoing Impacts of the Coronavirus on the Construction Workforce and Demand


Total construction spending ticked up from June to July, as gains in residential and public construction offset a dip in private nonresidential projects, according to a new analysis of federal construction spending data the Associated General Contractors of America released today. Officials noted, however, that challenges remain for the industry, particularly because of continuing problems with coronavirus flare-ups and supply-chain disruptions.


“Although nonresidential construction is no longer in free fall, many categories face continuing challenges,” said Ken Simonson, the association’s chief economist. “The rapid spread of the delta variant of COVID-19 is causing a pullback in re-openings and travel that may lead some owners to postpone new projects. Meanwhile, materials price increases, limited supplies of key materials, and long or uncertain delivery times are impeding the industry’s recovery.”


Construction spending in July totaled $1.57 trillion at a seasonally adjusted annual rate, an increase of 0.3 percent from June, and 9.0 percent higher than the pandemic-depressed rate in July 2020. Once again, residential construction saw monthly and year-over-year gains, while nonresidential construction spending posted mixed results. The residential construction segment climbed 0.5 percent for the month and 26.5 percent year-over-year. Combined private and public nonresidential construction spending inched up 0.1 percent compared to June but declined 4.2 percent compared to July 2020.


Private nonresidential construction spending fell 0.2 percent from June to July and 3.6 percent since July 2020. The largest private nonresidential category, power construction, decreased by 0.7 percent from June to July and 0.9 percent year-over-year. Among the other large private nonresidential project types, commercial construction—comprising retail, warehouse and farm structures—was essentially unchanged for the second month in a row but higher than in July 2020 by 4.6 percent. Manufacturing construction spending was also nearly unchanged for the month and up 1.8 percent from a year earlier. Office construction decreased 0.1 percent compared to June and 6.1 percent year-over-year.


Public construction spending increased 0.7 percent for the month but was 5.1 percent lower year-over-year. Among the largest segments, highway and street construction gained 1.9 percent compared to June but dipped 0.1 percent over 12 months. Public educational construction fell 0.5 percent in July and 6.4 percent year-over-year. Spending on transportation facilities was up 0.3 percent from June but fell 4.2 percent from July 2020.


Association officials said the spending figures highlight some of the challenges the industry is facing amid a resurgent coronavirus and ongoing supply chain problems. They added that the association will release more details on how demand for new projects and workforce supply are being impacted by the coronavirus during a virtual media event at noon on Thursday, September 2nd with Autodesk.


“We are starting to get a more complete picture of how the resurgent coronavirus and policy responses to it are impacting the construction industry,” said Stephen E. Sandherr, the association’s chief executive officer. “The industry will not be out of the woods without new federal infrastructure investments and support for workforce development.”


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