Non-residential and multi-family construction spending slumped in March amid supply chain issues and labor shortages.

According to an analysis of Associated General Contractors (AGC) of America released May 2 regarding federal spending data. Association leaders urged Washington officials to end tariffs on building materials and expand opportunities to learn the skills needed for rewarding careers in construction.

“Contractors continue to report strong demand for most types of structures, with few owners canceling or postponing planned projects,” said Ken Simonson, the association’s chief economist. “But labor shortages and supply chain issues, from lockdowns in China to war in Ukraine, are slowing project completion.”

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 March 2021. Private residential construction accounted for all of the increase in the past month, rising 1.0% for the month and 18.4% from March 2021. In contrast, private non-residential construction spending fell 1.0% for the month. .2% from February, although the March total was 8.5% higher than March 2021. Government construction spending fell 0.2% for the month but rose 1.7 % compared to the level of a year ago.

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

There were notable monthly declines in the major categories of private non-residential dwellings despite generally robust growth from the previous year. The largest private non-residential segment, electrical construction, slipped 1.2% for the month to a level 0.3% below the March 2021 rate. The second-largest segment, commercial construction, slipped 1.9% in March, but gained 15.5% year-on-year. Manufacturing construction fell 1.6% in March, but topped the March 2021 rate of 31.8%.

The largest public segments also fell in March. Highway and street construction fell 0.4% from February, but rose 7.5% from March 2021. School construction fell 0.8% for the month and 6.2% year-on-year. Construction spending in transportation fell 0.5% in March and 1.2% year-on-year.

Association officials said resolving the materials and labor supply issues will require short-term and long-term action from officials in Washington. They urged President Biden to end tariffs that restrict supplies and raise prices for wood, steel and aluminum products. To improve labor supply, they called for increased funding for vocational and technical education and recognition of a wider range of apprenticeship programs.

“Now that Congress has funded a substantial increase in infrastructure construction, it is imperative that the supply of materials and workers also be increased,” said Stephen E. Sandherr, the association’s chief executive. “Congress and the administration must act quickly on multiple fronts.”

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