Construction spending during October 2021 was estimated at a seasonally adjusted annual rate of $1,598.0 billion, 0.2% (±1.2%) above the revised September estimate of $1,594.8 billion, according to The U.S. Census Bureau. The October figure is 8.6% (±1.3%) above the October 2020 estimate of $1,471.7 billion.
During the first 10 months of this year, construction spending amounted to $1,323.1 billion, 7.5% (±1.0%) above the $1,230.8 billion for the same period in 2020.
In October, the estimated seasonally adjusted annual rate of public construction spending was $353.0 billion, 1.8% (±2.0%) above the revised September estimate of $346.8 billion. Highway construction was at a seasonally adjusted annual rate of $102.5 billion, 2.4% (±4.9%) above the revised September estimate of $100.1 billion. Educational construction was at a seasonally adjusted annual rate of $82.2 billion, 0.2% (±2.0%) above the revised September estimate of $82.0 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,245.0 billion, 0.2% (±0.7%) below the revised September estimate of $1,247.9 billion.
• Residential construction was at a seasonally adjusted annual rate of $774.7 billion in October, 0.5% (±1.3%) below the revised September estimate of $778.6 billion.
• Nonresidential construction was at a seasonally adjusted annual rate of $470.3 billion in October, 0.2% (±0.7%) above the revised September estimate of $469.4 billion.
“It is encouraging to see such a broad-based pickup in spending on nonresidential projects in the latest month,” said Ken Simonson, Associated General Contractors chief economist. “But the construction industry still faces major challenges from workforce shortages and supply-chain bottlenecks.”
Association officials said that spending on many categories of public construction is likely to increase soon as the investments from the Bipartisan Infrastructure bill begin to flow. But they cautioned that the supply chain challenges and labor shortages were impacting construction schedules and budgets and prompting some owners to delay or cancel projects. They urged the Biden administration to explore new ways to relieve shipping delays and to invest more in career and technical education programs that serve as a pipeline into construction careers.
“On the surface, there is much to be encouraged by in October’s construction spending data,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Nonresidential spending is now at its highest level since July 2020 and has rebounded 3.1% since bottoming out in June 2021. Nonresidential spending expanded meaningfully for the month and those gains were spread across most subsectors. Data characterizing the two prior months were upwardly revised by a combined $27 billion, or 1.7%.
“But construction data do not adjust for inflation, and these spending gains are largely attributable to increases in the cost of delivering construction services,” said Basu. “Challenges that have suppressed nonresidential construction spending growth remain firmly in place. While lofty levels of investment in real estate would normally be associated with significant private construction volumes, many project owners have been induced to postpone projects because of elevated material and labor costs as well as widespread shortages.
“Still, leading indicators remain positive,” said Basu. “ABC members collectively expect revenues and employment levels to climb during the months ahead, according to ABC’s Construction Confidence Index. Design work is plentiful, which means that many investors are at least considering moving forward with projects. In certain geographies, especially in the southern United States, office and other segments are improving, which should translate into more abundant construction starts once global supply chains and materials prices normalize. In this regard, the emergence of the omicron variant adds another layer of uncertainty and may prevent certain materials and equipment prices from declining in the very near term.
“The bottom line is that 2022 should be an excellent year for nonresidential construction,” said Basu. “Performance will be led by public construction, especially in the context of a recently passed and large infrastructure package. Among the segments that are set to zoom ahead are roads and bridges, school construction, water systems, airports, seaports and rail. Traditional office and lodging construction will likely remain weak in much of the nation, however.”