The U.S. Census Bureau reported that construction spending during June 2022 was estimated at a seasonally adjusted annual rate of $1,762.3 billion, 1.1% (±1.0%) below the revised May estimate of $1,781.9 billion. The June figure is 8.3%(±1.5%) above the June 2021 estimate of $1,628.0 billion.
During the first six months of this year, construction spending amounted to $848.2 billion, 10.7% (±1.0%) above the $766.0 billion for the same period in 2021. Spending on private construction was at a seasonally adjusted annual rate of $1,416.4 billion, 1.3% (±0.5%) below the revised May estimate of $1,434.4 billion.
Highway construction was at a seasonally adjusted annual rate of $97.4 billion, 2.7% (±5.1%) below the revised May estimate of $100.1 billion; and -1.1 year-over-year.
In June, the estimated seasonally adjusted annual rate of public construction spending was $345.9 billion, 0.5% (±1.8%) below the revised May estimate of $347.5 billion. Educational construction was at a seasonally adjusted annual rate of $77.5 billion, 0.7% (±3.0%) below the revised May estimate of $78.1 billion.
- Residential construction was at a seasonally adjusted annual rate of $923.7 billion in June, 1.6% (±1.3%) below the revised May estimate of $939.2 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $492.7 billion in June, 0.5% (±0.5%)* below the revised May estimate of $495.3 billion.
“Strong demand for construction is being offset by rising materials prices and labor shortages,” said Stephen E. Sandherr, Associated General Contractors of America (AGC) chief executive officer. “As firms stretch schedules and boost costs to cover rising materials prices it is getting harder for public and private owners to proceed with some planned projects.”
Association officials urged public leaders to boost investments in training programs that expose new and transitioning workers to high-paying construction career opportunities. And they urged officials at all levels of government to work together to address port backups, shipping shortages and manufacturing challenges that are taxing every point of the construction material supply chain.
“Attracting more people into construction careers and fixing the broken supply chain for key materials will help kick start a number of stalled construction projects,” Sandherr said. “In other words, addressing labor and materials shortages is the best way to boost construction spending.”
“There continues to be significant downward pressure on nonresidential construction spending volumes, and that is likely to intensify going forward,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “To date, construction spending measured in dollars has been propped up by elevated construction delivery costs, including higher materials prices and rapidly rising wages. Despite those inflationary pressures, aggregate nonresidential construction spending has failed to recover to pre-pandemic levels in nominal terms. The situation looks even worse when adjusting for inflation.
“The primary issue is that those high construction delivery charges are inducing a significant fraction of project owners to reconsider start dates,” said Basu. “True, backlog remains elevated, according to ABC’s Construction Backlog Indicator, but this may be because it is taking longer to complete projects. Additional project delays and cancellations are likely as borrowing costs continue to ratchet higher for those who purchase construction services and as the risk of recession increases. For now, many contractors remain busy and continue to operate at or near capacity. Whether that will continue for another 12 to 18 months remains an unanswered question.”