Mike Pallerino
August 7, 2018
Construction spending declined 1.1 percent in June from an upwardly revised record level in May, but there were widespread gains in both public and private investment for the first half of the year, according to an analysis of new government data by the Associated General Contractors of America. Association officials said the relatively strong construction spending figures show how recent tax and regulatory reforms are helping boost demand for construction.
Despite the decline from May, construction spending in the first six months of 2018 combined was 5.1 percent higher than in January through June 2017, the economist pointed out. For the month, public construction spending slumped 3.5 percent, private residential spending decreased 0.5 percent, and private nonresidential construction spending slipped 0.3 percent. On a year-to-date basis, in contrast, public construction spending climbed 4.7 percent, private residential spending grew 8.3 percent, and private nonresidential construction spending edged up 1.8 percent
Among public infrastructure spending categories, the largest segment—highway and street construction–increased 4.2 percent year-to-date. Educational construction inched up 0.1 percent in the first half of the year, while transportation construction (airports, transit, public rail and ports) jumped 11.7 percent.
The largest private category, single-family homebuilding, increased 9.0 percent year-to-date, while multifamily construction spending dipped 0.7 percent, Simonson noted. The largest private nonresidential category—power construction spending (including oil and gas field and pipeline structures)—declined 0.8 percent year-to-date, but the next largest segment—commercial construction (comprising retail, warehouse and farm buildings) had a gain of 4.8 percent. Private office construction spending grew by 5.6 percent year-to-date, while manufacturing construction spending jumped shrank 8.5 percent.
Association officials said recent steps to reform the federal tax code and reduce regulatory barriers to economic growth appear to be helping boost demand for construction. But they cautioned that growing construction labor shortages and new trade tariffs affecting the price of key construction materials could hamper future sector growth.
