All Categories Post Increases Compared to February 2023, Suggesting Monthly Downturn is Due to Temporary Factors Rather than Cooling Demand for Most Types of Construction Projects
Total construction spending declined from January to February to an annual rate of nearly $2.1 trillion, but all categories posted year-over-year gains, according to an analysis of a new government report that the Associated General Contractors of America released today. Association officials noted, however, that the monthly decline could have been caused by changes in winter weather patterns, including heavy rain and snow in the west, during February.
“There were monthly decreases for nearly all types of nonresidential projects,” said Ken Simonson, the association’s chief economist. “But every spending segment increased from a year earlier, suggesting the current downturns may reflect short-term challenges such as severe weather, not fading demand.”
Construction spending, not adjusted for inflation, totaled $2.092 trillion at a seasonally adjusted annual rate in February. That figure is 0.3 percent below the downwardly revised January rate, but 10.7 percent above the February 2023 level.
Spending on private nonresidential construction decreased 0.9 percent in February but rose 12.6 percent from February 2023. The largest segments recorded similar patterns. Manufacturing construction slid 0.6 percent for the month but jumped 31.8 percent year-over-year. Commercial construction slumped 1.7 percent in February but ticked up 0.9 percent over 12 months. Investment in power, oil, and gas projects declined 0.5 percent for the month but rose 6.9 percent year-over-year.
Public construction spending decreased 1.2 percent for the month but soared 16.8 percent from a year earlier. The largest public segment, highway and street construction, fell by 1.6 percent in February but was up 18.5 percent from February 2023. Public educational spending slumped 1.8 percent from January but climbed 15.4 percent year-over-year.
Spending on private residential construction gained 0.7 percent for the month and 6.3 percent year-over-year. Single-family construction climbed 1.4 percent from January, the tenth-straight increase. Spending on multifamily projects dipped 0.2 percent in February but remained 6.1 percent higher than a year earlier.
Association officials said the big jump in year-over-year public-sector investments in infrastructure and construction was good news for the industry, but also cautioned that many firms continue to struggle to find enough workers to hire. They urged federal, state, and local officials to boost funding for construction education and training programs to help encourage more people to seek construction careers.
“It is in the public interest to make sure there are enough people available to keep pace with growing investments in infrastructure, manufacturing and clean energy,” said Jeffrey D. Shoaf, the association’s chief executive officer. “Investing in new construction education and training programs and creating a workable legal immigration process for skilled construction workers will help get key projects completed and provide another path to middle class prosperity for many workers.”