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Sun July 03 2022

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Supply-chain woes and labour shortages hit US construction

3 May Spending in a number of categories of US construction slumped in March as supply-chain woes and labour shortages stymied strong project demand.

Contractors struggled to find enough workers and get timely deliveries of materials, according to an analysis of federal spending data carried out by Associated General Contractors of America (AGC).

Association leaders urged Washington officials to end tariffs on construction materials and widen the opportunities for gaining the skills for careers in construction.

Spending on most categories of non-residential and multifamily construction declined from February to March.

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

Construction spending in March totalled US$1.73 trillion at a seasonally adjusted annual rate, 0.1% above the upwardly revised February rate and 11.7% higher than in March 2021. Private residential construction spending accounted for all of the increase in the latest month, rising 1.0% for the month and 18.4% from March 2021.

In contrast, private non-residential construction spending slumped 1.2% from February, although the March total was 8.5% higher than in March 2021. Public construction spending slipped 0.2% for the month but increased 1.7% from the year-ago level.

Among residential segments, single-family construction added 1.3% over the February total and 19.4% year-over-year. Multi-family construction fell 0.5% in March but rose 3.9% from a year earlier. Spending on improvements to existing owner-occupied houses increased 1.1% for the month and 22.5% year-over-year.

There were notable monthly declines in the largest private non-residential categories despite generally robust growth from a year earlier. The largest private non-residential segment, power construction, slipped 1.2% for the month to a level 0.3% below the March 2021 rate. The next-largest segment, commercial construction, skidded 1.9% in March but gained 15.5% year-over-year. Manufacturing construction fell 1.6% in March but topped the March 2021 rate by 31.8%.

The largest public segments also slipped in March. Highway and street construction declined 0.4% from February but rose 7.5% compared to March 2021. Educational construction tumbled 0.8% for the month and 6.2% year-over-year. Transportation construction spending slid 0.5% in March and 1.2% year-over year.

Association officials said solving the materials and labour supply problems will require both short- and long-term action by officials in Washington. They urged President Biden to end tariffs that are restricting supplies and raising prices for lumber, steel, and aluminium products. To improve the labour supply, they called for more funding of career and technical education and recognition of a broader range of apprenticeship programmes.

“Now that Congress has funded a substantial increase in infrastructure construction, it is imperative that the supply of materials and workers be increased as well,” said Stephen Sandherr, the association’s chief executive officer. “Congress and the administration need to act promptly on several fronts.”

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