Report: Construction spending down, but 1st half result outpace 2015 totals

Construction spending decreased in June for the third month in a row but most segments posted solid increases in the first half of 2016 compared to the same period in 2015, according to an analysis by the Associated General Contractors of America (AGCA). Association officials said spending appears to have leveled off after a strong early start to the year prompted by mild winter weather conditions in many parts of the country. 
Construction spending in June totaled $1.134 trillion at a seasonally adjusted annual rate, 0.6 percent lower than the May total. The declines in spending from March to June followed unusually large increases in the previous three months, probably because of exceptionally mild winter weather in some regions,  AGCA said. Year-to-date increase of 6.2 percent for January through June 2016, compared with the same months of 2015, provides a truer picture of the industry’s condition.
Private residential spending was virtually unchanged for the second month in a row and 7.8 percent higher year-to-date. Spending on multifamily residential construction slid 1.5 percent for the month but soared 22 percent year-to-date, while single-family spending fell 0.4 percent from May to June but rose 11 percent year-to-date.
Private nonresidential construction spending decreased 1.3 percent for the month but climbed 7.9 percent year-to-date, AGCA said. The largest private nonresidential segment in June was power construction (including oil and gas pipelines), which slipped 0.7 percent for the month but rose 8.2 percent year-to-date. The next-largest segment, manufacturing, lost 4.5 percent for the month and 2.7 percent year-to-date. Commercial (retail, warehouse and farm) construction declined 1.6 percent in June but climbed 8.6 percent year-to-date.
Public construction spending declined 0.6 percent from a month before but was still up 1.5 percent for the first five months of 2016 combined, AGCA said. The biggest public segment – highway and street construction – shrank by 1.4 percent for the month but was up 3.9 percent year-to-date. The other major public category – educational construction – dipped by 0.5 percent in June but gained 5.9 percent for the combined January-June period.
Association officials contractors continue to report strong demand in many parts of the country and appear to continue to struggle to find enough workers to keep pace with demand for construction. They urged Congress to act on legislation to reform and boost funding for career and technical education, known as the Perkins Act, as quickly as possible.