Nonresidential and Multifamily Construction Spending Slump in March

Spending on most categories of nonresidential and multifamily construction declined from February to March as contractors struggled to find enough workers and get timely deliveries of materials, according to an analysis the Associated General Contractors of America released regarding federal spending data. Association leaders urged Washington officials to end tariffs on construction materials and widen the opportunities for gaining the skills for rewarding careers in construction.

Construction spending in March totaled $1.73 trillion at a seasonally adjusted annual rate, 0.1% above the upwardly revised February rate and 11.7% higher than in March 2021. Private residential construction spending accounted for all of the increase in the latest month, rising 1.0% for the month and 18.4% from March 2021. In contrast, private nonresidential construction spending slumped 1.2% from February, although the March total was 8.5% higher than in March 2021. Public construction spending slipped 0.2% for the month but increased 1.7% from the year-ago level.

Among residential segments, single-family construction added 1.3% over the February total and 19.4% year-over-year. Multifamily construction fell 0.5% in March but rose 3.9% from a year earlier. Spending on improvements to existing owner-occupied houses increased 1.1% for the month and 22.5% year-over-year.

There were notable monthly declines in the largest private nonresidential categories despite generally robust growth from a year earlier. The largest private nonresidential segment, power construction, slipped 1.2% for the month to a level 0.3% below the March 2021 rate. The next-largest segment, commercial construction, skidded 1.9% in March but gained 15.5% year-over-year. Manufacturing construction fell 1.6% in March but topped the March 2021 rate by 31.8%.

The largest public segments also slipped in March. Highway and street construction declined 0.4% from February but rose 7.5% compared to March 2021. Educational construction tumbled 0.8% for the month and 6.2% year-over-year. Transportation construction spending slid 0.5% in March and 1.2% year-over year.

Association officials said solving the materials and labor supply problems will require both short- and long-term action by officials in Washington. They urged President Biden to end tariffs that are restricting supplies and raising prices for lumber, steel and aluminum products. To improve the labor supply, they called for more funding of career and technical education and recognition of a broader range of apprenticeship programs.