Summary
Build Material and Labor Shortages Continue to Hold Back Construction
- Construction spending declined 0.5% during September. The residential and nonresidential categories both fell during the month. Higher building material prices, persistent difficulty in sourcing materials and shortages of skilled labor continue to weigh on construction activity.
- The September data are clearly disappointing, although upward revisions to the prior month takes some of the sting out of the drop. August’s data were revised 0.1 percentage point higher, and both August and July now show 0.1% increases.
- Residential spending dipped 0.4% in September, as single-family (-0.6%), multifamily (-0.3%) and home improvement (-0.1%) outlays all pulled back.
- Nonresidential spending, which is still feeling the reverberations from the pandemic, sunk 0.6%. Private lodging (-0.7%), healthcare (-1.2%), manufacturing (-1.6%), power (-1.2%) and transportation (-0.4%) project spending all fell during the month.
- Not all nonresidential categories weakened. Office (+0.2%), commercial (+0.1%) and educational (+0.7%) outlays improved during the month.
- Public expenditures retreated 0.7% during the month, ending a two-month string of gains. Public highway & street and transportation spending both declined 0.7%.
- On a year-to-date basis through September, overall construction spending is up 7.1% compared to the same period last year. By that same measure, residential is up 24.5%, while nonresidential is down 5.8%.