Total U.S. construction spending fell for the second month in September as twin 0.9% declines in nonresidential and public investment more than offset a 0.5% gain in private residential investment. Total construction spending, at $1.150 trillion at a seasonally adjusted annual rate in September, was down 0.2% compared to September 2015. But year-to-date the value of construction put in place is 4.4% ahead of the first nine months of 2015.
The 0.9% September monthly decline—the sixth decrease in the past seven months—led public construction outlays to its lowest level since March 2014.
“There is still plenty of oomph in private demand for construction and growing support for school construction, but public infrastructure investment is crumbling just when it is needed most,” said Ken Simonson, Associated General Contractors of America’s chief economist. “These conflicting trends have left total construction spending nearly flat for the past 15 months.”
Public educational spending rose 3.8% year-to-date but public infrastructure spending declined across-the-board. Public spending on highway and street construction slipped 0.7%; other transportation facilities such as transit and airports dropped 4.8%; sewage and waste disposal slumped 8.9%; water supply fell 8.3%; and conservation and development declined 4.5%.
Private nonresidential construction spending decreased 1.0% for the month but is up 7.8% year-to-date. The largest private nonresidential segment in September was power construction (including oil and gas pipelines), which declined 1.4% for the month but is up 7.4% year-to-date. The next-largest segment, manufacturing, dropped by 1.5% for the month and is down 2.5% year-to-date. Commercial (retail, warehouse and farm) construction decreased by 2.4% in September but climbed 8.6% year-to-date. Private office construction slipped 0.4% for the month but soared 27% year-to-date.
Private residential construction spending increased by 0.5% between August and September and rose 5.8% year-to-date. Spending on multifamily residential construction increased by 2.0% for the month and 18.8% year-to-date, while single-family spending inched up 0.1% for the month and rose 6.0% year-to-date.
Association officials said that even though a handful of states have recently passed measures to increase investments in infrastructure, many other states have cut back on their funding for public works. They urged voters to approve state and local funding measures to repair aging infrastructure. They also urged Congress to enact legislation to finance repairs to the nation’s aging waterways and port systems.
“Public-sector funding cuts for infrastructure aren’t just hurting the construction industry, they are also slowing commutes and undermining quality of life in many communities,” said Stephen Sandherr, AGC’s chief executive officer. “Voters should send a strong message that they want to drive better roads, drink better water and learn in better facilities.”
