Construction spending lackluster in November

The Associated General Contractors of America say removing regulatory obstacles and releasing federal infrastructure money would stimulate construction in 2023.

Construction workers on a road project

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Total construction spending increased by 0.2 percent in November, hindered by a lack of new infrastructure projects along with a continuing slide in homebuilding, according to the Arlington, Virginia-based Associated General Contractors’ (AGC) analysis of federal spending data.

AGC officials have urged leaders in Washington to speed the release of funds authorized by infrastructure laws passed in 2021 and 2022 and minimize regulatory delays associated with those projects.

“A variety of private nonresidential categories, as well as multifamily projects, posted solid spending gains in November,” AGC Chief Economist Ken Simonson says. “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 just more than $1.8 trillion at a seasonally adjusted annual rate in November, 0.2 percent above the October rate and 8.5 percent above the November 2021 rate. Spending on private residential construction was down 0.5 percent in November, declining for the sixth consecutive month. Spending on private nonresidential construction rose 1.7 percent in November, and public construction investment edged down 0.1 percent.

Among private nonresidential segments, spending on manufacturing plants—the largest type—jumped 6.5 percent for the month and 43 percent compared to November 2021. Commercial construction—comprising warehouse, retail and farm construction—was unchanged, while private power construction increased 1.2 percent from October. Private health care construction rose .1 percent for the month.

Residential spending contracted 2.9 percent from October in single-family homebuilding. That outweighed increases of 2.4 percent in multifamily construction and 1.3 percent in additions and renovations to owner-occupied houses.

The largest public segment—highway and street construction—decreased by 1 percent in November. Other infrastructure categories also slipped. Spending declined by .2 percent for transportation facilities and 2 percent for water supply projects. These decreases offset spending upticks of 0.1 percent in education construction and 0.3 percent in sewage and waste disposal construction.

Association officials say regulatory delays associated with new Buy America provisions in the Bipartisan Infrastructure Bill and some of the labor mandates in the Inflation Reduction Act are delaying projects.

RELATED: AGC says jobs going unfilled | Construction material costs up 10.1 percent year over year in November

AGC will release at 2 p.m. Eastern on Jan. 4 its annual construction industry outlook which will offer insights into the industry’s hiring plans and market expectations for the coming year.

“Much of the outlook we plan to release is predicated on the assumption the administration will work to accelerate infrastructure projects in 2023,” ABC CEO Stephen E. Sandherr says. “That is why the administration should address the regulatory confusion it has created and get work on infrastructure projects started as quickly as possible.”
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