Construction spending in October reached the highest level in nearly eight years with growth in all major categories, according to an Associated General Contractors of America analysis. Construction spending in October totaled $1.107 trillion at a seasonally adjusted annual rate, 1% higher than the September total and 13% higher than in October 2014, Simonson said. He noted that the total was the highest since December 2007.
Association officials cautioned, however, that demand for construction appears to be growing at a faster rate than the supply of qualified workers available to fill positions at firms.
“The October data were positive across the board, with robust growth for the month and year in residential, private nonresidential and public construction,” said Ken Simonson, the association's chief economist. “The pause that had appeared in private and public nonresidential spending for several months seems to have ended.”
Private residential spending increased 1% for the month and 16.6% over 12 months. Simonson noted that demand for multifamily residential construction grew at a particularly robust rate, 1.4% for the month and 27.9% year-over-year, while single-family spending rose 1.6% and 11.4%, respectively.
Private nonresidential construction spending gained 0.6% for the month and 15.3% over 12 months. Simonson observed that there were year-over-year increases in every private nonresidential category except “commercial” (retail, warehouse and farm) construction. The largest category, manufacturing construction, soared 3% and 40.5%, respectively.
Public construction spending rose 1.4% from a month before and 6.1% from 12 months earlier. Of the two biggest public categories, highway and street construction increased 1.1% and 6%, respectively, while spending educational facilities was flat for the month and up 8.4% for the year.
“The breadth of the expansion and the large number of categories with double-digit increases suggests that construction will continue growing well into 2016,” Simonson commented. “My only concern is whether contractors will be able to find enough qualified workers to undertake all of the projects.”
Association officials cautioned that as construction demand continues to expand, many firms are likely to have an even harder time finding enough qualified workers to fill available positions.
“We are reaching the point where demand for construction services is going to outstrip the supply of qualified and available workers,” said Stephen E. Sandherr, the association’s chief executive officer. “Once that happens, firms are going to bid on fewer projects, slow their schedules and worker shortages will bring more pressure on contractors to adjust their prices to meet the challenge of finding qualified craft professionals to perform the work.”