ARLINGTON, VA. — Total U.S. construction spending declined in September for the first time since February, as both residential and nonresidential construction slipped, according to new analysis of construction spending data the Associated General Contractors of America released Nov. 1.
Construction spending in September totalled $1.57 trillion at a seasonally adjusted annual rate, down 0.5 per cent from August. Year-to-date spending in the first nine months of 2021 combined increased 7.1 per cent from the total for January-September 2020.
While both residential and nonresidential construction declined from August to September, the two categories have diverged relative to 2020 levels. Residential construction spending slipped 0.4 per cent for the month but was 24.5 per cent higher year-to-date. Combined private and public nonresidential construction spending decreased 0.6 per cent in September and 5.8 per cent year-to-date.
“Spending on projects has been slowed by shortages of workers and materials, as well as extended or uncertain delivery times,” said Ken Simonson, the association’s chief economist, in a statement. “And the extreme rise in materials costs is likely to mean some infrastructure projects will no longer be affordable without additional funding.”
Most infrastructure categories posted significant year-to-date declines. The largest public infrastructure segment, highway and street construction, was 1.3 per cent lower than in January-September 2020. Spending on public transportation construction slumped 6.8 per cent year-to-date. Investment in sewage and waste disposal structures was the sole exception, rising 4.3 per cent, but public water supply projects dipped 0.9 per cent and conservation and development construction dropped 19.5 percent.
Other types of nonresidential spending also decreased year-to-date. Combined private and public spending on electric power and oil and gas projects declined 2.5 per cent. Education construction slumped 10.1 per cent. Commercial construction, comprising warehouse, retail and farm structures, dipped 1.7 per cent, as a 13.2 per cent drop in retail construction outweighed a 12 per cent hike in warehouse structures. Office spending fell 9.2 per cent and manufacturing construction inched down 0.2 per cent.