Construction spending decreased by 0.3 percent from May to June, reaching a seasonally adjusted annual rate of $2.148 trillion, according to a new government report analyzed by the Associated General Contractors of America. The decline was driven by drops in single-family homebuilding and major public project types, which outweighed gains in certain private nonresidential categories. Association officials have called on the Biden administration to ease regulatory barriers hindering infrastructure projects.
“Although overall outlays fell for the second month in a row, there were enough bright spots to suggest construction will continue growing, on balance,” said Ken Simonson, the association’s chief economist. “In particular, data centers, manufacturing, and several infrastructure segments are expanding.”
The report indicated that construction spending was 6.2 percent higher than in June 2023 despite the monthly decline. Private nonresidential and residential spending both saw monthly decreases but increased year-over-year. Nonresidential construction dropped by 0.1 percent for the month but rose 4.2 percent compared to June 2023. Manufacturing construction within this segment climbed by 0.1 percent for the month and surged by 19.1 percent year-over-year.
Data centers experienced their 13th consecutive month of growth with an increase of 1.7 percent for June and a substantial rise of 62.4 percent over the past year. However, these gains were counterbalanced by declines in commercial and power construction sectors, which fell by 0.8 percent and 0.6 percent respectively.
Private residential construction spending declined by 0.3 percent for June but grew by 7.3 percent over the past year. Single-family construction fell by 1.2 percent for the month but increased by 9.9 percent year-over-year, while multifamily spending saw a slight increase of 0.1 percent in June but decreased by 7.4 percent from June last year.
Public construction spending also saw a decrease of 0.4 percent for the month but rose by 7.3 percent from a year earlier with highway and street and educational construction falling slightly yet showing yearly increases.
Association officials highlighted concerns among state and local officials regarding compliance with new Build America Buy America requirements under the Biden administration, which complicate project initiation when domestic components are unavailable.
“The best way to rebuild domestic manufacturing capacity for infrastructure components is to get projects moving so construction firms can start buying those products,” said Jeffrey D Shoaf, the association’s chief executive officer.“Unfortunately, the Biden administration’s current approach to Buy America is likely delaying the start of key infrastructure projects and suppressing demand for those components.”