Construction spending during September 2021 was estimated at a seasonally adjusted annual rate of $1,573.6 billion, 0.5% (±1.0%) below the revised August estimate of $1,582.0 billion. The September figure is 7.8% (±1.5%) above the September 2020 estimate of $1,459.3 billion.
During the first nine months of this year, construction spending amounted to $1,177.5 billion, 7.1% (±1.0%) above the $1,099.8 billion for the same period in 2020.
In September, the estimated seasonally adjusted annual rate of public construction spending was $343.7 billion, 0.7% (±1.8%) below the revised August estimate of $345.9 billion. Highway construction was at a seasonally adjusted annual rate of $99.8 billion, 0.7% (±4.6%) below the revised August estimate of $100.5 billion. Educational construction was at a seasonally adjusted annual rate of $80.7 billion, 0.9% (±2.0%) above the revised August estimate of $80.0 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,229.9 billion, 0.5% (±0.7%) below the revised August estimate of $1,236.1 billion.
- Residential construction was at a seasonally adjusted annual rate of $773.5 billion in September, 0.4% (±1.3%) below the revised August estimate of $776.8 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $456.4 billion in September, 0.6% (±0.7%) below the revised August estimate of $459.3 billion.
“Spending on projects has been slowed by shortages of workers and materials, as well as extended or uncertain delivery times,” said Ken Simonson, Associated General Contractor’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.”
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%.
“It is not surprising that nonresidential construction spending declined in September,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Nonresidential construction spending has generally been trending lower for several months and the factors behind this are well known. First, the pandemic has continued, resulting in ongoing global supply chain disarray. That has kept commodity and materials prices higher than they otherwise would be, causing some project owners to pull back on construction starts. Indeed, ABC’s Construction Backlog Indicator has signaled a loss of momentum in nonresidential construction spending.
“Second, many observers thought that America would have passed a meaningful infrastructure package by now,” said Basu. “That has not yet happened, and many state transportation agencies, along with their local counterparts, note that planning for projects has become extraordinarily challenging in the context of uncertain federal funding.
“Finally, to the extent that projects are moving forward, construction skills shortages are slowing the pace of construction delivery,” said Basu. “Were an infrastructure package to pass, it is unclear how projects would be sufficiently staffed given a higher rate of retirement among construction workers and a lack of entry into the skilled trades. These factors have continued in recent weeks, suggesting that nonresidential construction spending may remain somewhat soft during the months ahead.”