Material and Labor Shortages Weigh on the Construction Industry
- Total construction spending slipped 0.3% during May.
- Residential spending edged up 0.2% over the month. Home building remains strong, but the pace of improvement has moderated as building material prices and availability have begun to weigh on activity.
- Nonresidential outlays declined 0.7%. Lodging, commercial, educational and healthcare project spending fell during the month, an indication that those sectors continue to absorb the aftershocks of the pandemic.
- Public outlays fell 0.2% in May. A solid increase in highway and street spending was not enough to outweigh declines in transportation and education expenditures.
- Labor scarcities and material shortages will likely weigh heavily on activity in the months ahead. That said, overall construction spending should improve as the impacts of the pandemic unwind and economic growth strengthens.