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Construction Spending Moving Ever Higher11-11-15 | News

Construction Spending Moving Ever Higher
At Highest Level in More Than Seven Years

Construction industry spending in September climbed to its highest pace in more than seven years. Total residential spending, including both the private and public sectors, climbed 1.8 percent month-to-month. But total nonresidential spending dropped 0.1 percent compared to August.

Construction spending in September rose to the highest level in more than seven years, according to U.S. Census Bureau data.

Spending in both the private and public sectors combined increased 0.6 percent compared to August to $1.09 trillion. That is 14.1 percent better than September 2014.

Not since March 2008 has construction spending been higher than September's value, data on the U.S. Census Bureau's website shows.

Construction spending on a year-to-date basis is $786.6 billion, a 10.5 percent increase compared to the same nine-month time frame in 2014.

Total residential spending, including both the private and public sectors, climbed 1.8 percent month-to-month, and jumped 17.2 percent over September 2014.

But total nonresidential spending dropped 0.1 percent compared to August, but increased 12.4 percent year-to-year. Nonresidential subcategories include: conservation and development, down 6.0 percent; religious facilities, up 5.6 percent; public safety, down 3.0 percent; and water supply construction, up 4.3 percent, all on a month-to-month basis.

Private sector building alone came in at $794.2 billion, a hike of 0.6 percent over August, and 16 percent better year-to-year. Private residential construction increased 1.9 percent over the previous month, and was 17.1 percent higher compared to September 2014. Nonresidential declined 0.7 percent compared to August, but was 15 percent better year-to-year.

Private sector single-family construction expanded 1.3 percent compared to August and was 12.7 percent higher year-to-year. Private multifamily construction went up nearly 5 percent month-to-month, and jumped 26.7 percent compared to September of a year ago.

Public sector building amounted to $300 billion, a 0.7 percent hike compared to August, and 9.4 percent better than September 2014. Residential was 1.2 percent and 22.7 percent higher month-to-month and year-to-year, respectively. Nonresidential increased 0.7 percent over August and was 9.1 percent better than September 2014.

Source: U.S. Census Bureau
Website link: https://tinyurl.com/6vjwzqk

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Certain Sectors Driving Spending Growth
Construction spending is not only at the highest level since March 2008, it is growing at the greatest year-to-year rate since January 2006, the Associated General Contractors said in a news release after analyzing the Census Bureau information.

The sectors of multifamily residential, lodging, manufacturing, office and education expanded sharply in September.

A downside is that total spending on nonresidential construction declined 0.1 percent between August and September because growing workforce shortages are impacting construction companies, the AGC added. "Overall demand for construction continues to grow at a very robust rate," Ken Simonson, chief economist for the AGC, said. "It appears, however, that many firms performing private nonresidential work could not find enough qualified workers in September to keep pace with growing demand."

Multifamily residential construction grew at a robust 4.9 percent for the month and 26.7 percent for the year. Public construction spending rose 0.7 percent from August and 9.4 percent annually. This trend was fueled mainly by the education category, which grew 2.4 percent for the month and 10.5 percent for the year.

However, private nonresidential spending fell by 0.7 percent from August, even though it is up 14.9 percent year-to-year. Spending in the lodging, manufacturing and office sectors expanded significantly year-to-year, but most other categories declined in spending from August to September. Again, firms are struggling to hire qualified workers and replace retirees, the AGC said.

There were only 479,000 unemployed construction workers in September, the lowest September total in 15 years, Simonson noted, citing data from the Bureau of Labor Statistics.

"Demand may be starting to outstrip the industry's capacity given the severe and growing shortages of available, qualified workers," Stephen E. Sandherr, chief executive officer of the AGC, said. He urged officials to act on measures outlined in the AGC's Workforce Development Plan, which is designed to make it easier to prepare, recruit and train new workers.

Source: Associated General Contractors
Website link: https://tinyurl.com/pnflqcv