The U.S. Census Bureau announced that construction spending during March 2022 was estimated at a seasonally adjusted annual rate of $1,730.5 billion, 0.1% (±0.7%) above the revised February estimate of $1,728.6 billion. The March figure is 11.7% (±1.0%) above the March 2021 estimate of $1,548.6 billion.
During the first three months of this year, construction spending amounted to $376.6 billion, 12.0% (±1.0%) above the $336.3 billion for the same period in 2021.
In March, the estimated seasonally adjusted annual rate of public construction spending was $350.8 billion, 0.2% (±1.3%) below the revised February estimate of $351.7 billion. Highway construction was at a seasonally adjusted annual rate of $103.1 billion, 0.4% (±4.1%) below the revised February estimate of $103.5 billion, but rose 7.5% compared to March 2021. Educational construction was at a seasonally adjusted annual rate of $80.3 billion, 0.8% (±1.6%) below the revised February estimate of $81.0 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,379.7 billion, 0.2% (±0.5%) above the revised February estimate of $1,376.9 billion.
- Residential construction was at a seasonally adjusted annual rate of $882.0 billion in March, 1.0% (±1.3%) above the revised February estimate of $873.2 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $497.6 billion in March, 1.2% (±0.5%) below the revised February estimate of $503.6 billion.
Spending on most categories of nonresidential and multifamily construction declined from February to March as contractors struggled to find enough workers and get timely deliveries of materials, according to an analysis by the Associated General Contractors of America. Association leaders urged Washington officials to end tariffs on construction materials and widen the opportunities for gaining the skills for rewarding careers in construction.
“Contractors continue to report strong demand for most types of structures, with few owners canceling or postponing planned projects,” said Ken Simonson, the association’s chief economist. “But worker shortages and supply-chain problems, from lockdowns in China to the war in Ukraine, are slowing project completions.”
“March’s construction spending numbers aren’t adjusted for inflation and are actually worse than they look,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “While overall construction spending rose 0.1% in March, largely because of the strength in multifamily residential construction, construction spending was down in real terms. Nonresidential construction performance declined because of weakness in segments like commercial (-1.9%) and amusement/recreation (-2.1%).
“Even though nonresidential construction spending levels are significantly short of what they were pre-pandemic, many contractors indicate that they are operating at capacity, according to ABC’s Construction Backlog Indicator,” said Basu. “This speaks to how challenging the economic environment is becoming, with contractors wrestling with workforce skills shortages and sky-high materials prices. The elevated cost of construction service delivery helps explain why more projects are not moving forward as project owners are forced to wait.
“Circumstances could become easier or more challenging for contractors during the months ahead,” said Basu. “The Federal Reserve’s stepped-up efforts to combat inflation will eventually translate into better pricing for key construction inputs. However, those same efforts will soften the economy. Many economists believe that a recession in America over the next 12 to 18 months has become virtually inevitable. Thus, even as delivering construction services becomes more affordable, demand for construction services, particularly private construction, may begin to fade.”