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Spending on the Rise; Workers Needed

Tuesday, August 4, 2015

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U.S. construction spending inched up in June to an annualized rate of $1.06 trillion, up 12 percent from year ago levels, according to newly released Census Bureau data.

Despite the smallest month-over-month increase seen in five months (0.1 percent), the spending rate is at the best pace recorded since 2006, the Associated General Contractors of America (AGC) reported in an analysis of the figures released Monday (Aug. 3).

Meanwhile, the association warned of a worker shortage and urged lawmakers to adopt and expand training opportunities.

Construction work
Photos: AGC

Construction spending in June recorded the highest year-over-year growth rate since 2006.

“Spending rose strongly in June from a year ago for all major construction categories—private nonresidential, residential and public,” said Ken Simonson, the association’s chief economist.

“Several of the private categories have risen especially fast,” Simonson said.

“Whether they can keep growing depends in part on companies being able to find enough skilled workers, a problem many contractors are already facing.”

Private Construction

Overall, spending on private construction was at a seasonally adjusted annual rate of $766.4 billion in June—0.5 percent below the revised May estimate of $770 billion, the Commerce Department reported.

Residential private construction spending saw a 0.4 percent increase from May, to reach $371.6 billion, while nonresidential spending dipped 1.3 percent from the month prior to reach $394.8 billion.

Residential construction spending rose 13 percent over 12 months and nonresidential spending increased 15 percent from a year earlier.

Public Construction

Public spending reached $298.2 billion, a 1.6 percent increase from revised May figures and an 8 percent jump from 12 months earlier.

highway construction

Construction spending is increasing, but a shortage of skilled workers plagues the industry, according to AGC.

Education construction spending rose 0.2 percent, to $67.2 billion. Highway construction was at a seasonally adjusted annual rate of $90.9 billion, a 1.2 percent increase above revised May numbers.

Worker Shortage

Simonson listed a few areas where one-year spending increases may present “troublesome" worker shortages:

  • 62 percent in manufacturing construction;
  • 48 percent in amusement and recreation construction;
  • 42 percent in lodging construction;
  • 27 percent in private office construction; and
  • 24 percent in private multifamily construction.

AGC has been warning the industry about a shortage in skilled workers since at least July 2013 and its latest report sings the same tune.

According to the association, the results demonstrate the need for federal, state and local officials to implement measures the association outlined in a Workforce Development Plan.

Those measures, which include expanding career and technical education opportunities (making it easier for firms to establish regional training programs and immigration reform) are designed to simplify recruiting and prepare new construction workers, AGC said.

‘Concerted Effort’ Needed

“It is clear that construction is rebounding but the progress may stall unless there is a concerted effort at all levels of government to provide training to get new workers into high-paying construction careers,” said Stephen E. Sandherr, the association's CEO.

“It would be a lost opportunity for the economy if firms can’t take advantage of growing demand for work because of a lack of qualified workers.”

Established in 1918, AGC represents nearly 30,000 general contractors, specialty contractors and service providers and suppliers.

July construction spending data is scheduled for release Sept. 1.


Tagged categories: Associated General Contractors (AGC); Construction; Contractors; Economy; Good Technical Practice; Market; North America; Public Buildings; Trends; Workers

Comment from Tom Schwerdt, (8/4/2015, 8:40 AM)

Yep, unemployment in Construction at 6.3% is now only a little worse than the country as a whole. AGC has been warning of a shortage since the unemployment rate in Construction temporarily dipped below 10% in 2013. We've now again been a whole 4 months with Construction unemployment below 10% (March-June 2015).

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