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November 2, 2023 - 1:27pm

Key Takeaways


Press Release from Associated Builders and Contractors: ABC: Nonresidential Construction Spending Increases For the 16th Straight Month in September

WASHINGTON, Nov. 1—National nonresidential construction spending increased 0.3% in September, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.1 trillion.

Spending was down on a monthly basis in 9 of the 16 nonresidential subcategories. Private nonresidential spending increased 0.1%, while public nonresidential construction spending was up 0.5% in September.

"Nonresidential construction spending increased for the 16th straight month in September," said ABC Chief Economist Anirban Basu. "While some private categories, including power, commercial and amusement and recreation saw healthy month-over-month increases, publicly financed construction accounted for more than 72% of September’s rise. Given increased federal infrastructure spending and exorbitant financing costs for private construction, that dynamic should remain firmly in place over the coming months."

"Despite a small decrease in spending in September, manufacturing construction remains the nonresidential sector’s outperformer," said Basu. "Spending in the category is up 62% over the past year and accounts for nearly 43% of the year-over-year increase in nonresidential construction put in place. With several industrial megaprojects ongoing, spending in the manufacturing segment will remain elevated for several quarters."


 

Press Release from Associated General Contractors of America: Construction Spending Increases 0.4 Percent As Record-high September Job Openings Imply Contractors Are Struggling To Keep Up With Demand

Both Residential and Nonresidential Spending Post Monthly Increases while Sharp Decline in Hiring Suggests Further Growth in Spending May Be Difficult Unless Industry Can Attract More Workers

Total construction spending increased by 0.4 percent in September, yet a record-high number of job openings suggests the industry would be completing even more projects if it could hire enough workers, according to an analysis of federal spending data the Associated General Contractors of America released today. Association officials cautioned that efforts in Congress to limit the construction industry’s access to potential workers could undermine future infrastructure and economic development projects.

"It is encouraging that most categories of construction, including homebuilding, are growing," said Ken Simonson, the association’s chief economist. "But the numbers would be even more impressive if the industry didn’t have so many unfilled job openings."

Construction spending, not adjusted for inflation, totaled $1.997 trillion at a seasonally adjusted annual rate in September. That figure is 0.4 percent above the August rate, which was revised up from the initial estimate. Spending on private residential construction rose by 0.6 percent, with a 1.3 percent increase in single-family spending and a dip of 0.1 percent in multifamily projects. Spending on private nonresidential construction edged up 0.1 percent in September, while public construction investment rose 0.4 percent.

The largest nonresidential segments showed mixed changes from August to September. Spending on manufacturing plants declined 0.4 percent. Spending on commercial construction—comprising warehouse, retail, and farm construction—rose by 0.7 percent. Highway and street spending slipped 0.1 percent. Investment in power, oil, and gas projects climbed 0.9 percent. Education spending jumped 1.8 percent.

A separate government report showed job openings climbed to 438,000 on September 30, the highest September figure in the 23-year history of the series. Meanwhile, the industry was able to hire only 294,000 employees in the entire month, an 18 percent decline from September 2022. Simonson said the huge number of openings was a sign the drop in hiring is due to a dearth of applicants, not projects.

Association officials warned that efforts in Congress to exclude the construction industry from the H-2B visa program will make it even harder for firms the find enough workers to keep pace with demand. They noted the federal government already underinvests in career and technical education programs that focus on construction. Excluding the industry from accessing the pool of workers available through the visa program would only make it harder for firms to build vital infrastructure and economic development projects, they noted.

"The construction industry is already up against a federal government that spends most of its education money urging students to pursue other career fields," said Stephen E. Sandherr, the association’s chief executive officer. "Excluding construction from the visa program is like having a federal government that wants to build things but doesn’t seem interested in having anybody to build them."

 

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