Construction Spending Dropped to a Seasonally Adjusted Annual Rate of$2.148 trillion in June as Construction Officials Urge Biden Administration to Ease Regulatory Barriers for Infrastructure Projects

Construction spending slid 0.3 percent from May to June as declines in single-family homebuilding and major public project types outweighed selective gains in private nonresidential categories, according to an analysis of a new government report that the Associated General Contractors of America released today. Association officials urged the Biden administration to explore ways to ease regulatory barriers that are preventing work from starting on vital infrastructure projects.

“Although overall outlays fell for the second month in a row, there were enough bright spots to suggest construction will continue growing, on balance,” said Ken Simonson, the association’s chief economist. “In particular, data centers, manufacturing, and several infrastructure segments are expanding.”

Construction spending, not adjusted for inflation, totaled $2.148 trillion at a seasonally adjusted annual rate in June. That figure is 0.3 percent below the May rate, but 6.2 percent above the June 2023 level.

Private nonresidential and residential spending both fell in June but rose year-over-year. Nonresidential construction slipped 0.1 percent for the month but rose 4.2 percent from June 2023. The largest private segment, manufacturing construction, climbed 0.1 percent and 19.1 percent, respectively. Data centers, which are included in the office total but reported on the Census Bureau’s website, climbed for the 13th-straight month, by 1.7 percent, and by 62.4 percent year-over-year. Those gains were offset by declines in commercial and power construction, which fell 0.8 percent and 0.6 percent, respectively, in June.

Spending on private residential construction declined 0.3 percent for the month but grew 7.3 percent over 12 months. Single-family construction fell 1.2 percent rose 9.9 percent year-over-year. Multifamily spending inched up 0.1 percent in June but slumped 7.4 percent from June 2023.

Public construction spending decreased 0.4 percent for the month but rose 7.3 percent from a year earlier. The largest public segments, highway and street and educational construction, fell 0.4 percent and 0.9 percent, respectively, in June but rose 5.7 percent and 4.8 percent, respectively, over 12 months. Public transportation spending rose 0.1 percent in June and 2.6 percent year-over-year.

Association officials noted that many state and local officials remain concerned about their ability to comply with the Biden administration’s new Build America Buy America requirements. Those new rules make it very difficult for projects to move forward when any components are not available domestically, which happens frequently.

“The best way to rebuild domestic manufacturing capacity for infrastructure components is to get projects moving so construction firms can start buying those products,” said Jeffrey D. Shoaf, the association’s chief executive officer. “Unfortunately, the Biden administration’s current approach to Buy America is likely delaying the start of key infrastructure projects and suppressing demand for those components.”