Warehouse Builds Nearly Offset Retail, But Construction Spending Still Down, AGC Says


For the first time in seven months, total construction spending decreased during September.

According to the Associated General Contractors of America, both nonresidential and residential construction slipped. AGC officials are urging the U.S. House of Representatives to complete work on the bipartisan infrastructure bill that the Senate passed months ago.

“Spending on projects has been slowed by shortages of workers and materials, as well as extended or uncertain delivery times,” said Ken Simonson, AGC of America chief economist. “And the extreme rise in materials costs is likely to mean some infrastructure projects will no longer be affordable without additional funding.”

Construction spending in September totaled $1.57 trillion (seasonally adjusted) nationwide, Simonson said, down 0.5 percent from August. Year-to-date spending in the first nine months of 2021 combined for an increase of 7.1 percent in total, compared to January through September 2020.

While both nonresidential and residential construction has experienced a decline in August and September of this year, the two categories have diverged as compared to 2020 levels. Nonresidential construction in both public and private sectors combined fell 0.6 percent in September and 5.8 percent year-to-date. Residential construction spending slipped 0.4 percent for September but was 24.5 percent higher year-to-date.

“Most infrastructure categories posted significant year-to-date declines,” said Simonton. “The largest public infrastructure segment – highway and street construction – was 1.3 percent lower than in January through September 2020. Spending on public transportation slumped 6.8 percent year-to-date.” The sole exception, he added, was investment in sewage and waste disposal structures; spending in this category rose 4.3 percent in the first nine months of 2021. That said, public water supply projects dipped 0.9 percent while conservation and development construction plummeted 19.5 percent.

Combined private and public spending on nonresidential electric power and oil and gas projects declined 2.5 percent over the same period in 2021. Education-related construction decreased 10.1 percent. Commercial construction – including warehouse, retail and farm structures – declined 1.7 percent. “A 13.2 percent plunge in retail construction from January through September of this year outweighed a 12 percent increase in construction of warehouse structures,” he said.

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