Construction spending slid 0.3% from May to June as declines in single-family homebuilding and major public project types outweighed selective gains in private nonresidential categories, according to a recent analysis of new government data by the Associated General Contractors of America.
Association officials urged the Biden administration to explore ways to ease regulatory barriers that are preventing work from starting on vital infrastructure projects.
“Although overall outlays fell for the second month in a row, there were enough bright spots to suggest construction will continue growing, on balance,” Ken Simonson, the association’s chief economist, said in a news release. “In particular, data centers, manufacturing, and several infrastructure segments are expanding.”
Construction spending, not adjusted for inflation, totaled $2.148 trillion at a seasonally adjusted annual rate in June, AGC reported. That figure is 0.3% below the May rate, but 6.2% above the June 2023 level.
Private nonresidential and residential spending both fell in June but rose year-over-year. Nonresidential construction slipped 0.1% for the month but rose 4.2% from June 2023. The largest private segment, manufacturing construction, climbed 0.1% and 19.1%, respectively. Data centers, which are included in the office total but reported on the Census Bureau’s website, climbed for the 13th straight month, by 1.7%, and by 62.4% year-over-year. Those gains were offset by declines in commercial and power construction, which fell 0.8%and 0.6%, respectively, in June.
Spending on private residential construction declined 0.3% for the month but grew 7.3% over 12 months. Single-family construction fell 1.2% rose 9.9% year-over-year. Multifamily spending inched up 0.1% in June but slumped 7.4% from June 2023.
Public construction spending decreased 0.4% for the month but rose 7.3% from a year earlier. The largest public segments, highway and street and educational construction, fell 0.4% and 0.9%, respectively, in June but rose 5.7% and 4.8%, respectively, over 12 months. Public transportation spending rose 0.1% in June and 2.6% year-over-year.
Association officials noted that many state and local officials remain concerned about their ability to comply with the Biden administration’s new Build America Buy America requirements. Those new rules make it difficult for projects to move forward when any components are not available domestically, which happens frequently, the association maintained.
“The best way to rebuild domestic manufacturing capacity for infrastructure components is to get projects moving so construction firms can start buying those products,” AGC CEO Jeffrey D. Shoaf said. “Unfortunately, the Biden administration’s current approach to Buy America is likely delaying the start of key infrastructure projects and suppressing demand for those components.”