Construction spending during October 2022 was estimated at a seasonally adjusted annual rate of $1,794.9 billion, 0.3% (±1.2%) below the revised September estimate of $1,800.1 billion. The October figure is 9.2% (±1.5%) above the October 2021 estimate of $1,644.3 billion, according to the U.S. Census Bureau.
Highway construction spending dipped for the month.
During the first 10 months of this year, construction spending amounted to $1,507.8 billion, 10.8% (±1.0%) above the $1,360.8 billion for the same period in 2021.
In October, the estimated seasonally adjusted annual rate of public construction spending was $374.6 billion, 0.6% (±2.0%) above the revised September estimate of $372.5 billion. Educational construction was at a seasonally adjusted annual rate of $79.4 billion, 0.5% (±2.0%) above the revised September estimate of $79.0 billion. Highway construction was at a seasonally adjusted annual rate of $113.4 billion, 0.8% (±4.9%) below the revised September estimate of $114.3 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,420.4 billion, 0.5% (±0.7%) below the revised September estimate of $1,427.6 billion.
- Residential construction was at a seasonally adjusted annual rate of $887.2 billion in October, 0.3% (±1.3%) below the revised September estimate of $890.0 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $533.2 billion in October, 0.8% (±0.7%) below the revised September estimate of $537.6 billion.
“Most nonresidential contractors report full order books but are having trouble hiring enough workers to keep projects on schedule,” said Ken Simonson, Associated General Contractors of America chief economist. “Rising interest rates and costs for materials are likely to choke off some projects but there will be plenty of infrastructure, manufacturing plants and renewable energy projects next year – if contractors can find enough workers to build them.”
Association officials said labor shortages remain one of the top concerns for most construction firms. They urged Congress and the administration to allow more immigrants with construction skills to enter the industry to provide short-term relief. But they maintained that the best way to resolve workforce shortages was to boost federal funding and support for construction-focused education and training programs.
“You can’t be both for infrastructure and against boosting investments in preparing workers to build that infrastructure,” said Stephen E. Sandherr, the association’s chief executive officer. “Until federal officials narrow the five-to-one gap in federal funding for college prep versus craft career development, labor shortages will restrain the industry’s ability to rebuild the economy.”
Construction industry job openings totaled 377,000 at the end of October, which exceeded the 341,000 employees hired during the month, according to government data. The gap implies contractors wanted to hire more than twice as many people as they were able to bring on board and most likely contributed to the decline in spending put in place, Simonson said.
“While economists have spent much of 2022 watching interest rates march higher and fretting about recession, contractors have been working through their lofty backlog and improving America’s built environment,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Despite the rising cost of capital, elevated materials prices and equipment shortages, contractors have generally remained upbeat despite a worsening outlook, according to ABC’s Construction Confidence Index.
“These data suggest that nonresidential construction activity is weakening,” said Basu. “Spending declined in a majority of nonresidential subsectors in October, and residential spending has now fallen in each of the previous four months. The only bright spot: the 0.6% increase in publicly financed nonresidential construction spending. The infrastructure package and excess pandemic relief funds should allow the public sector to retain momentum even as the broader economy weakens.”