The U.S. Census Bureau reported that construction spending during May 2021 was estimated at a seasonally adjusted annual rate of $1,545.3 billion, 0.3% (±1.0%) below the revised April estimate of $1,549.5 billion.
The May figure is 7.5% (±1.3%) above the May 2020 estimate of $1,437.7 billion. During the first five months of this year, construction spending amounted to $594.8 billion, 4.6% (±1.0%) above the $568.5 billion for the same period in 2020.
In May, the estimated seasonally adjusted annual rate of public construction spending was $342.0 billion, 0.2% (±1.8%) below the revised April estimate of $342.7 billion. Highway construction was at a seasonally adjusted annual rate of $98.6 billion, 1.4% (±6.1%) above the revised April estimate of $97.2 billion. Educational construction was at a seasonally adjusted annual rate of $82.0 billion, 1.9% (±1.8%) below the revised April estimate of $83.6 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,203.3 billion, 0.3% (±0.8%) below the revised April estimate of $1,206.8 billion.
- Residential construction was at a seasonally adjusted annual rate of $751.7 billion in May, 0.2% (±1.3%) above the revised April estimate of $750.3 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $451.6 billion in May, 1.1% (±0.8%) below the revised April estimate of $456.5 billion.
Officials with the Associated General Contractors of America (AGC) called on the Biden administration to remove tariffs on key construction materials, allow unemployment supplements that are keeping people out of the workforce to expire and take steps to address supply chain backups.
“Many construction firms would likely be even busier if only they could find materials for their projects and workers for their teams,” said Stephen E. Sandherr, AGC’s chief executive officer. “Ending a program that is basically paying people not to work will help, especially if the administration also removes tariffs that are driving prices up on key construction materials.”
“There is a significant gap between elevated levels of contractor confidence and still poor nonresidential construction industry outcomes,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Recent months have seen declines in nonresidential construction spending and employment, but contractors continue to indicate upbeat assessments regarding near-term performance, according to ABC’s Construction Confidence Index.
“Certain segments have experienced particularly large declines in activity,” said Basu. “Lodging-related construction declined nearly 3% in May and is down more than 23% on a year-ago basis. Despite the red-hot data center construction segment, spending in the office category is down nearly 9% on a year-over-year basis. Spending declines are even larger in the conservation/development, educational and religious categories. Spending in the public safety category, which surged during the earlier months of the pandemic, is down nearly 40% since May 2020.
“Interestingly, while a number of private construction segments are struggling under the dislocating impacts of the pandemic, public nonresidential construction has actually declined more rapidly than the private sector over the past year,” said Basu. “With many state and local governments experiencing much better financial conditions than anticipated a year ago, public construction spending can be expected to improve going forward. However, anticipated improvement may be delayed by the specter of still high construction materials prices, which may induce many project owners to postpone the onset of construction. Construction worker shortages are also deeply problematic, further exacerbating costs at a time of sluggish industry recovery. To put this into further perspective, at the onset of the crisis, residential construction comprised 41% of total construction spending. That proportion is now up to 49%.”