The U.S. construction industry can thank residential projects for an increase in spending. Yet, the uptick may prove short-lived.
U.S. construction spending rose 9 percent in July from the prior year to $1.57 trillion on a seasonally adjusted basis, according to the Commerce Department’s most recent report. The bulk came in residential construction spending, which jumped 26.5 percent. Nonresidential construction spending dropped 4.2 percent.
Risks from the resurgence of the coronavirus and supply chain difficulties could torpedo gains, according to the Associated General Contractors of America.
“The rapid spread of the delta variant of Covid-19 is causing a pullback in re-openings and travel that may lead some owners to postpone new projects,” said Ken Simonson, the group’s chief economist. “Meanwhile, materials price increases, limited supplies of key materials, and long or uncertain delivery times are impeding the industry’s recovery.”
Private construction spending increased 13.6 percent year-over-year to an annual rate of $1.23 trillion. Within that category, private residential construction spending rose 27 percent annually while private nonresidential spending fell 3.6 percent.
Public spending fell by an annual rate of 5.1 percent to $337.8 billion as highway construction slipped to $94.5 billion and education fell to $79.7 billion. Public residential spending dropped 4 percent, while public nonresidential spending dropped 5 percent.