Manufacturing, Lodging and Apartment Spending Remain Strong While Office, Health Care, Highway and School Segments Rebound; Association Officials Call for New Construction Workforce Development Measures

Oct 1, 2015 -- Construction spending in August reached a seven-year high and climbed at the fastest rate since 2006, according to an analysis by the Associated General Contractors of America. Association officials noted that growing demand for construction was likely to add to the challenges many firms are having finding qualified workers.

"There were widespread monthly and year-over-year gains in August for all major construction categories—private nonresidential, residential and public," said Ken Simonson, the association's chief economist. "Activity in all three categories has been accelerating recently and should continue rising into 2016—if contractors can find enough workers with the right skills to complete the projects underway and currently being designed or financed."

Construction spending in August totaled $1.086 trillion at a seasonally adjusted annual rate, 0.7 percent higher than the July total and 13.7 percent higher than in August 2014, Simonson said. He noted that the total was the highest since May 2008 and the year-over-year growth rate was the strongest since March 2006, indicating a faster pace of construction spending overall.

Private nonresidential spending in August increased 0.2 percent from July and 16.9 percent from a year earlier, while private residential spending increased 1.3 percent for the month and 16.1 percent over 12 months. Public construction spending rose 0.5 percent from a month before and 7.0 percent from 12 months earlier.

"There has been exceptionally strong growth in manufacturing, lodging and apartment construction all year," Simonson said. "More recently, office, health care, highway and educational structures have rebounded as well."

Association officials note that, according to a survey the group released in September, 86 percent of firms reported they are having a hard time finding qualified workers to fill available positions. Those shortages are likely to become more severe as demand for construction services continues to grow, they added. That is why the association continues to push for measures outlined in its updated Workforce Development Plan designed to make it easier to prepare, recruit and train new workers.

"While it is great to see growing demand for construction, many firms won't benefit if they don't have enough workers to get the job done," said Stephen E. Sandherr, the association's chief executive officer. "Without a better approach to attracting and preparing future construction workers, construction projects are likely to get more expensive and take longer to complete."

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