Construction spending during July 2023 was estimated at a seasonally adjusted annual rate of $1,972.6 billion, 0.7% (±0.5%) above the revised June estimate of $1,958.9 billion. The July figure is 5.5% (±1.2%) above the July 2022 estimate of $1,869.3 billion. During the first seven months of this year, construction spending amounted to $1,101.5 billion, 3.7% (±1.0%) above the $1,062.1 billion for the same period in 2022.
In July, the estimated seasonally adjusted annual rate of public construction spending was $423.7 billion, 0.4% (±1.0%) below the revised June estimate of $425.2 billion. Educational construction was at a seasonally adjusted annual rate of $89.8 billion, 0.1% (±1.3%) above the revised June estimate of $89.7 billion. Highway construction was at a seasonally adjusted annual rate of $128.1 billion, 0.6% (±2.1%) below the revised June estimate of $128.9 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,548.9 billion, 1.0% (±0.3%) above the revised June estimate of $1,533.7 billion.
Residential construction was at a seasonally adjusted annual rate of $879.0 billion in July, 1.4% (±1.3%) above the revised June estimate of $866.8 billion.
Nonresidential construction was at a seasonally adjusted annual rate of $670.0 billion in July, 0.5% (±0.3%) above the revised June estimate of $666.9 billion.
“Today’s reports show there is no letup in demand for construction workers or private-sector projects,” said Ken Simonson, Associated General Contractors of America’s chief economist. “The industry is raising pay faster than other sectors amid persistently low unemployment. But contractors are frustrated by the slow pace of new public project awards.”
Association officials noted that public construction activity has been hampered by a flurry of regulatory measures that are causing confusion and slowing approvals on projects. They noted that this week alone the administration issued new rules that will add to the confusion around what constitutes a water of the U.S. and others that seek to apply federal wage rates to projects funded by the so-called Inflation Reduction Act.
After today’s jobs report, which indicated that nonresidential construction added an outsized number of jobs in August, one would have expected a strong construction spending growth number as well,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Alas, the economic data, just like the economy, continue to be full of surprises. In July, nonresidential construction spending barely expanded. Once one adjusts for inflation, spending declined in real terms.
“Perhaps the bigger surprise is that construction spending weakness was not concentrated in the private developer-driven segments that have struggled to establish consistent momentum, but in a number of public construction segments,” said Basu. “Monthly spending was down in the highway/street, transportation, sewage/waste disposal and conservation/development categories. However, each of these categories has experienced year-over-year spending growth.
“Since nonresidential construction hiring was strong last month, the expectation is that July’s construction spending number will prove to be an aberration,” said Basu. “Spending growth should be solid going forward, driven in large measure by several massive construction projects in development or early construction stages. That said, those segments that depend most on bank financing are poised to weaken going forward.”