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Weather May Account for Conflicting Trends on Spending and Jobs as Construction Officials Warn of Labor Shortages and Regulatory Delays, Urge Public Officials to Ease Red Tape, Boost Construction Training

Total construction spending decreased by 0.4 percent in December, yet industry job openings at the end of the month set a new high for December, according to an assessment the Associated General Contractors of America conducted today of two new federal data sets. Association officials said the jobs data signals that the slowdown in construction spending may have been more about changes in weather than demand.

“The record number of job openings in construction compared to previous Decembers suggests contractors are bullish about their backlogs despite a dip in spending in December,” said Ken Simonson, the association’s chief economist. “Some of the downturn may be due to unusually bad weather rather than a shrinking market.”

Construction spending, not adjusted for inflation, totaled $1.810 trillion at a seasonally adjusted annual rate in December, 0.4 percent below the November rate, which was revised up from the initial estimate a month ago. Spending on private residential construction decreased for the seventh consecutive month in December, by 0.3 percent. Spending on private nonresidential construction fell 0.5 percent in December, while public construction investment declined 0.4 percent.

A separate government report showed there were 359,000 job openings in construction at the end of the year, a jump of 58,000 or 19 percent from a year earlier and the highest December total in the 23-year history of the data. Openings exceeded the 217,000 workers hired during the entire month, which suggests contractors wanted to bring on board more than twice as many employees as they were able to find, Simonson added.

Spending varied among large private nonresidential segments. The biggest component, commercial construction—comprising warehouse, retail, and farm construction—increased 0.4 percent. Spending on manufacturing plants decreased 2.2 percent. Private power construction rose 0.5 percent.

Public categories were also mixed. The largest public segment, highway and street construction, increased 1.1 percent in December. Spending declined 0.3 percent for education construction. Investment in transportation facilities rose 0.2 percent.

Residential spending shrank due to a 2.3 percent contraction from November in single-family homebuilding. That outweighed increases of 3.2 percent in multifamily construction and 0.7 percent in additions and renovations to owner-occupied houses.

Association officials cautioned that labor shortages and regulatory delays on federally funded projects pose a risk for contractors in 2023. They urged the Biden administration and Congress to clarify new Buy America and registered apprenticeship requirements included in new federal funding measures. And they continued to push for immigration reform and support for construction training programs to get more people into construction careers.

“Instead of just talking about projects that someday might get built, the President and Congress should take steps to speed project reviews, reduce regulatory delays and enable men and women to pursue high-paying construction careers,” said Stephen E. Sandherr, the association’s chief executive officer.