Construction spending increased 0.4% from September to October as a pickup in single- and multifamily residential building outweighed declines in public outlays and mixed results for private nonresidential categories, according to a recent analysis of new government data by the Associated General Contractors of America.
Association officials said construction has yet to begin on many federally funded projects amid lengthy regulatory reviews.
“Despite a flurry of project announcements by the federal government, much of the money still has not been awarded in construction contracts, let alone work under way,” Ken Simonson, the association’s chief economist, said in a news release. “At the same time, major private categories are growing more slowly or shrinking.”
Construction spending totaled $2.174 trillion at a seasonally adjusted annual rate in October, AGC reported. That figure is 0.4% above the upwardly revised September rate and 5.0% above the October 2023 level.
Private residential spending increased 1.5% in October and 6.4% compared to October 2023. Single-family homebuilding rose 0.8% and 1.3%, respectively. Multifamily construction edged up 0.2% in October but declined 6.8% from a year earlier. Spending by homeowners on additions and renovations jumped 2.7% for the month and 18.5% year-over-year.
Public construction spending declined 0.5% for the month but rose 4.5% over 12 months. Among the top three segments, highway and street construction slipped 0.7% and 1.2% respectively, education construction dipped 0.4% for the month but rose 0.6%, and transportation spending fell by 0.1% in October but increased 5.4% from a year earlier.
Private nonresidential spending slipped 0.3% for the month but posted a 3.5% year-over-year gain. Of the three largest segments, manufacturing construction was unchanged from September but 16.3% higher than in October 2023. Power construction rose 0.2% for the month and 5.3% year-over-year. Commercial construction (including warehouse, retail, and farm) fell by 1.1% for the month and 11.2% compared to last year.
Association officials urged the incoming Trump administration and Congress to explore ways to accelerate federal permitting reviews for infrastructure and construction projects. They also urged the new administration to give federal agencies greater flexibility in complying with new Buy America rules. For example, agencies need to be able to provide waivers when no domestically produced materials are available.
“There is no reason the federal government can’t hold projects to same high standards and still complete required reviews in months, instead of years,” AGC CEO Jeffrey D. Shoaf said. “Cutting federal review times and giving agencies more flexibility will help get more construction projects started.”