Construction spending during May 2023 was estimated at a seasonally adjusted annual rate of $1,925.6 billion, 0.9% (±0.5%) above the revised April estimate of $1,909.0 billion. The May figure is 2.4% (±1.2%) above the May 2022 estimate of $1,880.9 billion. During the first five months of this year, construction spending amounted to $740.8 billion, 2.9% (±1.0%) above the $719.6 billion for the same period in 2022.
In May, the estimated seasonally adjusted annual rate of public construction spending was $412.4 billion, 0.1% (±1.0%) above the revised April estimate of $411.8 billion. Highway construction was at a seasonally adjusted annual rate of $124.6 billion, 0.4% (±2.8%) below the revised April estimate of $125.1 billion. Educational construction was at a seasonally adjusted annual rate of $87.7 billion, virtually unchanged from (±1.5%) the revised April estimate of $87.7 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,513.2 billion, 1.1% (±0.3%) above the revised April estimate of $1,497.2 billion.
- Residential construction was at a seasonally adjusted annual rate of $857.4 billion in May, 2.2% (±1.3%) above the revised April estimate of $839.4 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $655.8 billion in May, 0.3% (±0.3%) below the revised April estimate of $657.8 billion.
“The data for May show there has been no letup in the feverish pace of manufacturing construction but a very mixed picture for other project types,” said Associated General Contractors of America Chief Economist Ken Simonson. “There have been strong year-over-year increases in most categories but it remains to be seen if the market is now cooling.”
Highway and street construction declined 0.4% from April and public spending on transportation facilities, such as airports, transit and passenger rail, slid 0.8%, Simonson noted.
Association officials urged the Biden administration to clarify the rules applying to U.S.-made construction materials, apprenticeship programs, and tax credits to fund promised energy projects. They warned that lack of clarity was keeping contractors from bidding on projects or proceeding on ones that had been awarded.
“Contractors are eager to build the infrastructure Congress has approved,” said Stephen E. Sandherr, the association’s chief executive officer. “It’s up to federal officials to make sure these projects can get built by issuing timely and clear rules that are consistent with Congressional intent.”
“Nonresidential construction spending declined in May, ending a streak of 11 consecutive monthly increases,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “While spending is up more than 17% over that span, manufacturing-related construction has accounted for the majority of that increase. Excluding the manufacturing segment, nonresidential construction spending is barely outpacing inflation, up just 6% over the past year.
“Contractors remain relatively upbeat, according to ABC’s Construction Confidence Index, and ongoing strength in manufacturing and publicly financed segments justifies that confidence,” continued Basu. “Unfortunately, conditions may prove challenging in other segments over the next few quarters. Interest rates remain elevated and are likely to rise at least once more over the second half of 2023, exacerbating already tight credit conditions and ultimately limiting construction activity.”