Total construction spending increased by 0.2% in November, dragged down by a lack of new infrastructure projects along with a continuing slide in homebuilding, according to a recent analysis of federal spending data by the Associated General Contractors of America.
Association officials urged leaders in Washington to speed the release of funds authorized by infrastructure laws passed in 2021 and 2022, and address regulatory delays associated with those projects.
“A variety of private nonresidential categories, as well as multifamily projects, posted solid spending gains in November,” said Ken Simonson, the association’s chief economist. “Many of these segments should continue to do well in 2023. But the timing of public construction, while well-funded, remains unclear.”
Construction spending, not adjusted for inflation, totaled $1.808 trillion at a seasonally adjusted annual rate in November, 0.2% above the October rate and 8.5% above the November 2021 rate. Spending on private residential construction declined for the sixth consecutive month in November, by 0.5%. Spending on private nonresidential construction rose 1.7% in November, while public construction investment edged down 0.1%.
Among private nonresidential segments, spending on manufacturing plants—the largest type—jumped 6.5% for the month and 43% compared to November 2021. Commercial construction—comprising warehouse, retail, and farm construction—was unchanged, while private power construction increased 1.2% from October. Private health care construction rose 0.1% for the month.
Residential spending shrank due to a 2.9% contraction from October in single-family homebuilding. That outweighed increases of 2.4% in multifamily construction and 1.3% in additions and renovations to owner-occupied houses.
The largest public segment, highway and street construction, decreased by 1.0% in November. Other infrastructure categories also slipped. Spending declined 0.2% for transportation facilities and 2.0% for water supply projects. These decreases offset upticks of 0.1% for education construction and 0.3% for sewage and waste disposal construction.
Association officials said regulatory delays associated with the new Buy America provisions in the Bipartisan Infrastructure Bill and some of the new labor mandates in the Inflation Reduction Act are delaying projects.