According to a new report from the Associated General Contractors of America (AGC), based on an analysis of new government data, construction spending hit a seasonally adjusted annual rate of $1.329 trillion, and grew 5.5 percent for the first nine months of 2018 combined. The report also noted continued year-to-date gains for major public and private categories.
Spending year-to-date through the first nine months of 2018 was 7.0 percent higher than it was from January through September 2017 for public construction and 5.1 percent for private construction. Within private construction, spending for residential projects increased 6.4 percent and 3.5 percent for nonresidential projects.
"Construction spending has increased among nearly every project type and geographic area this year," said Ken Simonson, the AGC's chief economist. "Despite month-to-month fluctuations, the outlook remains positive for modest to moderate increases in most spending categories at least through the first part of 2019."
The largest public categories recorded year-to-date gains of 15.8 percent for transportation construction, 5.8 percent for highway construction and 2.0 percent for educational construction.
Of the three private residential spending categories, single-family homebuilding rose 6.4 percent, multifamily was virtually unchanged and improvements to existing buildings climbed 7.1 percent.
Among private nonresidential spending segments, office construction increased 7.4 percent, commercial construction (retail, warehouse, and farm) increased 4.8 percent, and power construction increased 2.3 percent. Manufacturing construction, however, declined 3.4 percent.
AGC officials said overall economic conditions remain positive, as the economy continues to benefit from recently enacted tax and regulatory reforms. However, they noted that, while demand for construction should remain strong for the next several months, the construction sector would be impacted by new trade tariffs, continued workforce shortages and higher interest rates.
"Washington has taken a number of positive steps to deliver robust economic growth during the past two years," said Stephen E. Sandherr, the AGC's chief executive officer. "The best thing federal officials can do to maintain current rates of growth is to resolve potentially costly trade disputes and boost investments in workforce development."