Weighed down by supply shortages, construction spending rises slowly in March

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Construction spending inched up slowly from February to March as supply shortages and rising materials prices continued to weigh on the industry.

The Associated General Contractors of America reported this week that the seasonally adjusted annualized rate for construction spending came to $1.73 trillion in March, up only 0.1% from the previous month. Among individual sectors, private residential construction was the only to show an increase, going up by 1% from February to March.

In contrast, spending on both private non-residential projects and public projects was down. Spending on private non-residential projects fell by 1.2% from February to March and spending on public projects by 0.2%

AGC officials blamed the decreases partly on supply shortages stemming both from pandemic-related shutdowns in China and from the war in Ukraine.

“Contractors continue to report strong demand for most types of structures, with few owners canceling or postponing planned projects,” said Ken Simonson, AGC chief economist, in a statement.

Among private non-residential projects, spending on power construction fell by 1.2% from February to March, commercial construction by 1.9% and manufacturing construction by 1.6%. Among public projects, highway and street construction was down by 0.4%, school construction by 0.8% and transportation projects by 0.5%.

Even with those monthly declines, spending in all construction categories was nonetheless higher this March than in the same month a year ago. Spending on private residential projects, for instance, was up 18.4% year-over-year and spending on private nonresidential projects was up 8.5%. Follow @TDR_WLJDan