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Construction Spending Up, Labor Warning

Friday, May 6, 2016

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New federal data suggests that the U.S. construction industry is continuing along the path to recovery, while industry officials warn that more qualified workers are needed to meet rising demand.

Associated General Contractors of America officials say strong private-sector demand and new federal investments in surface transportation programs are fueling growth.

construction
© iStock.com / li jingwang

In March, U.S. construction spending totaled $1.138 trillion.

“The new spending data, combined with recent employment reports, make it clear that the construction industry is growing faster than the broader U.S. economy,” said Stephen E. Sandherr, the association’s CEO. 

“But unless firms have enough workers to keep pace with demand, construction schedules are likely to slow as firms are forced to cope with labor shortages.”

AGC released its construction spending analysis of U.S. Census Bureau figures on Monday (May 2).

Spending Totals

“Construction should be a significant contributor to economic growth in the remainder of 2016 and beyond,” said Ken Simonson, the association's chief economist.

Construction spending in March totaled $1.138 trillion at a seasonally adjusted annual rate, 0.3 percent higher than the revised February total and 8 percent higher than in March 2015, AGC reported.

Private residential spending inched up 1.6 percent for the month and 8.5 percent compared to 12 months earlier. Spending on multifamily residential construction jumped 5.6 percent in March and 34.6 percent compared to last March.

Meanwhile, single-family spending was flat compared to February but rose 13.4 percent compared to March 2015.

Private nonresidential construction spending increased nearly 1 percent for the month and 9.3 percent compared to the same month last year.

road construction
© iStock.com / jocic

New federal investments in surface transportation programs are fueling growth, AGC officials say.

Simonson observed that all but one segment increased from 12 months before.

The largest private nonresidential segment in March was manufacturing construction, which rose 2.2 percent for the month but dropped 2.0 percent year-over-year. The next-largest segment, power (including oil and gas pipelines), lost 1.8 percent for the month but gained 2.0 percent for the year.

Public construction spending dipped 1.9 percent from a month before but is still up 6.7 percent from 12 months earlier.

The biggest public segment—highway and street construction—was up 0.4 percent for the month but is up 18.8 percent year-over-year, as new federal surface transportation investments enacted last year began to impact demand, Simonson noted.

Need for Experienced Labor

Association officials say the new construction spending figures “reinforce anecdotal reports that the industry continues to grow amid robust demand for most types of construction services.” 

They warn that labor shortages are likely to become even more severe as construction firms continue to expand.

Established in 1918, AGC represents more than 30,000 firms, including general contractors, specialty contractors and service providers and suppliers.

   

Tagged categories: Associated General Contractors (AGC); Business conditions; Commercial Construction; Construction; Economy; Public Buildings; Spending

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