Construction spending in August reached a seven-year high and climbed at the fastest rate since 2006, according to a recent analysis by the Associated General Contractors of America.
“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% higher than the July total and 13.7% 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% from July and 16.9% from a year earlier, while private residential spending increased 1.3% for the month and 16.1% over 12 months. Public construction spending rose 0.5% from a month before and 7.0% 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 that AGC released in September, 86% 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, Simonson added.