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AGC: Construction spending accelerates in August

Oct. 6, 2023
All major segments post year-over-year increases, but officials warn a shortage of qualified workers could hamper construction firms’ ability to keep pace with demand

Total construction spending increased by 0.5% in August, driven by increases in most large nonresidential construction segments in addition to residential projects, according to a recent analysis of federal spending data by the Associated General Contractors of America.

Association officials also indicated that while growing demand for construction is welcome news, construction firms remain concerned about finding enough qualified workers to keep pace with demand.

“For now, all types of construction are growing,” Ken Simonson, the association’s chief economist, said in a news release. “But unless the supply of qualified workers increases, many projects are likely to be delayed.”

Construction spending, not adjusted for inflation, totaled $1.983 trillion at a seasonally adjusted annual rate in August. That figure is 0.5% above the July rate, which was revised up from the initial estimate. Spending on private residential construction increased for the fourth consecutive month in August, by 0.6%. Spending on private nonresidential construction increased by 0.3% in August, while public construction investment increased 0.6%.

Spending was mostly positive among large nonresidential segments. Spending on manufacturing plants increased 1.2% between July and August. Spending on power, highway and street, office, and health care construction each grew by 0.4% for the month. Educational construction was flat. In contrast, commercial construction—comprising warehouse, retail, and farm construction—fell by 0.9% in August compared to a month ago.

Residential spending grew by 0.6% from July to August. Single-family homebuilding contributed the majority share of the growth, expanding by 1.7% for the month. New multifamily construction was up 0.6% compared to July. 

Association officials noted that its recent workforce survey found that 88% of construction firms that are hiring are having a hard time finding enough qualified workers. They urged federal officials to allow more people with construction skills to lawfully enter the country as a short time fix to labor shortages. And they pushed Congress and the Biden administration to boost funding for career and technical education to expose and prepare more domestic workers for high-paying careers in construction.

“We are seeing strong and growing investments in construction projects from both the private and the public sectors,” said Stephen E. Sandherr, the association’s CEO. “But without new investments in construction education and training, as well as programs to allow skilled construction workers into the country, those projects are going to take longer and cost more to get built.”

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