ARLINGTON, VA. — Total construction spending in the U.S. declined by 0.7 per cent in August as spending on new houses turned sharply lower, while public and private nonresidential construction posted mixed results, according to analysis of federal spending data released Oct. 3 by the Associated General Contractors of America.
Association officials said rising interest rates were hurting demand for housing and many private-sector projects.
“The construction market is in a transition that is likely to accelerate in the months ahead,” said Ken Simonson, the association’s chief economist. “Steeply rising interest rates have crushed demand for single-family housing and threaten developer-financed projects, while newly enacted federal legislation will soon boost investment in power, manufacturing and infrastructure construction. But a pickup in these segments will require improvements in the timely approval of projects and adequate supplies of workers and materials.”
Construction spending, not adjusted for inflation, totalled $1.78 trillion at a seasonally adjusted annual rate in August, 0.7 per cent below the upwardly revised July rate. Spending on new single-family homes declined for the fourth month in a row, falling by 2.9 per cent from July. Spending on other residential segments rose by 0.4 per cent for multifamily construction and 1.0 per cent for improvements to owner-occupied housing.
Private nonresidential spending edged down 0.1 per cent for the month. The largest segment, power, comprising electric, oil, and gas projects, slipped 0.9 per cent in August.
Spending on commercial construction — warehouse, retail and farm projects — was flat. Manufacturing construction declined by 0.5 per cent in August but jumped 21.6 per cent over 12 months. Spending on office construction, which includes data centres, climbed 0.3 per cent for the month.
Public construction spending decreased by 0.8 per cent in August, with declines for the three largest segments. Highway and street construction spending fell 1.4 per cent, while educational and transportation construction spending each decreased 0.4 per cent.