According to the Associated General Contractors (AGC) of America, overall construction spending in the U.S. retreated in April following unusually large gains in and February and March, according to the group’s analysis of new government data.
AGC officials said private construction continues to do well so far in 2017 but under-investment in public infrastructure is holding back the industry and is jeopardizing long-run economic growth.
"Most private construction categories have increased significantly in the first four months of this year compared to the same period in 2016, despite a pullback from March to April," noted Ken Simonson, AGC’s chief economist, in a statement. "But spending on public infrastructure for transportation, water and sewer projects has been slumping."
Construction spending in April totaled $1.219 trillion at a seasonally adjusted annual rate, down 1.4% from March, which was revised sharply higher from the government's initial estimate, Simonson pointed out.
He added that the year-to-date increase of 5.8% for January through April 2017, compared with the same months of 2016, shows overall demand for construction remains healthy.
Private nonresidential spending slipped 0.6% for the month but has grown 5.9% year-to-date. The largest private nonresidential segment in April was power construction (including oil and gas field and pipeline projects), which fell by 1.4% for the month but was up 5.4% year-to-date. The next-largest segment, commercial construction – which includes retail, warehouse and farm activity – edged down 0.3% in April but climbed 13.7% year-to-date.
Manufacturing construction declined 1.9% for the month and 9.4% year-to-date, the group noted.
Spending on multifamily residential construction inched down by 0.2% for the month though it jumped 7.7% year-to-date, while single-family spending rose 0.8% from March to April and climbed 5.2% year-to-date.
Yet public construction spending posed a problem: tumbling 3.7% from the prior month and 5.2% for the first four months of 2017.
The biggest public segment—highway and street construction—also dropped 3.7% for the month and decreased 3.2% year-to-date. Among other major public infrastructure categories, spending on transportation facilities such as transit and airport construction declined 4.6% year-to-date; spending on sewage and waste disposal plummeted 23.5%; and spending on water supply fell 10.9%.
"It will be increasingly difficult for the U.S. economy to expand if employers are having to spend more to cope with aging infrastructure instead of on new jobs, new equipment and new innovations," noted Stephen Sandherr, AGC’s CEO, in a statement.