Construction spending climbed in May to the highest level since October 2008, according to an analysis by the Associated General Contractors of America.  Association officials cautioned, however, that those spending gains could be at risk unless all levels of government strengthen programs to develop the construction workforce.

“There were solid monthly and year-over-year gains in May for all major construction categories—private nonresidential, residential and public,” said Ken Simonson, the association's chief economist. “The private segments appear poised to maintain growth throughout the year. But contractors increasingly report difficulty in finding workers with the right skills to construct large and complex projects.”

Construction spending in May totaled $1.036 trillion at a seasonally adjusted annual rate, 0.8 percent higher than the April total despite a steep upward revision in that figure and 8.2 percent higher than in May 2014, Simonson said. He noted that the year-over-year growth rate was the strongest since March 2014, indicating a faster pace of construction spending overall.

Private nonresidential spending in May increased 0.9 percent from April and 10.3 percent from a year earlier, while private residential spending increased 0.3 percent for the month and 7.8 percent over 12 months. Public construction spending rose 0.7 percent from a month before and 2.8 percent from 12 months earlier.

“Several components of the private categories posted especially large year-over-year increases,” Simonson said. “Whether they can continue to grow depends in part on companies being able to find enough skilled workers.”

Simonson cited as areas for which worker shortages could be problematic the one-year increases of 70 percent in manufacturing construction spending, 46 percent in amusement and recreation construction, 30 percent in lodging construction, 26 percent in private office construction and 21 percent in multifamily construction.

Association officials urge federal, state and local officials to enact the measures outlined in the association’s Workforce Development Plan.  Those measures, which include expanding career and technical education opportunities, making it easier for firms to establish regional training programs and immigration reform, are designed to make it easier to recruit and prepare new construction workers.

“We need to rebuild what was once a robust pipeline for attracting and training younger people into high-paying construction careers,” said Stephen E. Sandherr, the association’s chief executive officer.  “It would be a sad irony if firms can’t take advantage of growing demand for work because there aren’t enough workers.”


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