Nonresidential construction spending has fallen for the first time in nearly a year.

National nonresidential construction spending fell 0.2 percent in May to a total of $1.06 trillion, according to U.S. Census Bureau data published on Monday.

An Associated Builders and Contractors’ analysis of the numbers showed spending fell monthly in nine of 16 nonresidential subcategories. Private nonresidential spending fell 0.3% and public nonresidential construction spending increased 0.1% in May, ABC officials said.

May’s spending decline ended an 11-month streak of monthly increases, Anirban Basu, chief economist for ABC, said in a statement.

鈥淲hile spending is up more than 17% over that span, manufacturing-related construction has accounted for the majority of that increase. Excluding the manufacturing segment, nonresidential construction spending is barely outpacing inflation, up just 6% over the past year,鈥� Basu added.

An ABC analysis said contractors were 鈥渞elatively upbeat鈥� and manufacturing projects and public finance justified the confidence, Basu said, noting however interest rates are high and are likely to rise once again during the rest of the year.

鈥淐ontractors remain relatively upbeat, according to ABC’s Construction Confidence Index, and ongoing strength in manufacturing and publicly financed segments justifies that confidence. Unfortunately, conditions may prove challenging in other segments over the next few quarters. Interest rates remain elevated and are likely to rise at least once more over the second half of 2023, exacerbating already tight credit conditions and ultimately limiting construction activity,鈥� Basu added.

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The Associated General Contractors of America, along with two other construction groups, filed a legal challenge Monday to the Biden Administration’s workplace vaccine requirement.

AGC joined the American Road and Transportation Builders Association and the Signatory Wall and Ceiling Contractors Alliance in filing a petition challenging a rule that will require employees of large contractors to be vaccinated or undergo regular COVID-19 testing.

The Occupational Safety and Health Administration published an emergency rule earlier this month calling on employers with 100 or more workers to ensure their workers are vaccinated by Jan. 4. In doing so, the AGC joins the Associated Builders and Contractors two dozen states and a variety of other organizations in mounting formal legal challenges of the OSHA mandate.

The trade group’s petition argues OSHA’s order will prompt “badly needed” employees to leave larger contractors or the construction industry at large in order to avoid the vaccine mandate. The legal action, filed in Virginia’s Fourth Circuit Court of Appeals, contends OSHA has no statutory authority to require vaccinations.

“The new rule will put many construction companies at grave risk of losing a substantial number of their workers to smaller companies, instead of leading to more people getting vaccinated in the sector,” said Stephen Sandherr, AGC chief executive.

OSHA’s vaccine mandate will affect an estimated 84 million American workers, requiring them to get vaccinated or undergo weekly COVID-19 tests. Companies that don’t comply with the order could be hit with fines running as high as $14,000 for each employee. Biden administration officials have argued the mandate is needed to avoid having a patchwork of local rules and to slow the spread of the virus.

The agency is separately requiring federal contractors and subcontractors to show, by Dec. 8, that their workers have been vaccinated.

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By Dan Shaw
91视频 staff

For anyone who follows construction statistics, Ken Simonson’s name is a familiar one.

For nearly 20 years, the chief economist at the Associated General Contractors of America has been keeping tabs on rises and falls in key indicators such as construction employment by metropolitan statistical area, state and the U.S. as a whole. His weekly data digest, read widely throughout the industry, is seen by many as a primary means of learning about some of the biggest trends in the industry.

Lately, he’s been devoting plenty of space to rising materials prices and supply shortages. His digest for the week ending May 11 noted such eye-popping facts as lumber future and steel-price indexes reaching new peaks, at triple or quadruple their lows of last year, and copper futures reaching an all-time high of $4.75 a pound on May 21.

Speaking on Wednesday during a Builder Breakfast webinar for the 91视频’s sister publication in Milwaukee, The Daily Reporter, on 鈥淭he future of the construction supply chain,鈥� Simonson readily acknowledged that the main culprit in all of this has been COVID-19. The pandemic has led not only to an unprecedented demand for new single-family houses but also renovation projects to make space for home offices and virtual learning.

But COVID-19 was only one of a handful of big disrupters of supply chains in recent years. Also of great consequence have been new tariffs on Canadian lumber, the recent blockage of the Suez Canal by an errant barge and the shutoff of the Colonial Pipeline in the eastern U.S. by a criminal group.

Many construction companies have found themselves locked into contracts that were negotiated when prices were lower and have thus been unable to pass these higher costs on to clients. And even as the pandemic has caused demand for residential projects to spike, it has led to a slowdown in the construction of hotels, dorms and hospital space used for purposes other than treating coronavirus patients. The resulting competition for the few projects left has put contractors under even more pressure to keep bid prices low.

鈥淕oing further out eventually the pandemic will be in the rearview mirror,鈥� Simonson said. 鈥淏ut we can see some trends that are likely to stick around. We know that population growth has slowed down sharply.

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And that has implications for housing, and for associated infrastructure, roads, and water and sewer and so forth, for local retail and for public buildings, such as schools and libraries.鈥�

At the end of Wednesday’s event, Simonson took some time to answer questions from viewers. Here’s a short transcript of some of what they asked and his replies (edited for clarity and brevity).

Question: Are single-family home starts still a good economic indicator?

Simonson: I see several ways of answering that. First, looking back over history, unquestionably the demand for single-family homes made the 2000 recession shorter and milder than it would have been and a lot of other things started recovering a year or two or three years after single-family housing. This gave a lot of people the impression that housing was somehow a locomotive for the rest of the economy and I used to hear, and I still hear sometimes, that nonresidential construction, commercial construction, follows housing by six to 12 or 18 months. I think what people mistook for causality was actually just different factors leading to that kind of growth.

But clearly housing starts are a very good indicator for actual residential construction and demand for related things, whether it’s lumber or appliances and so forth.

Question: Any idea, or have you got a gut feeling, on when we can see a softening of the costs?

Simonson: Well, there’s always disagreement about what makes markets move and where prices are going to go next. But right now there’s unusually strong agreement that they’re not going to get back to pre-pandemic lows. A year ago, in September of last year, lumber prices suddenly plunged after hitting record levels and went down, maybe 30 percent or 40 percent. Then things turned around in a vicious way and we’ve been seeing new records pretty much every week, until recently. Just in the last few weeks lumber futures on the commodities exchange of what used to be called the Chicago Mercantile Exchange had another big plunge. But I’m not ready to say: OK the worst is over for lumber and with steel.

So that’s a long answer to say: No, my crystal ball is too cloudy to say if we’re going to see prices start to come down anytime soon. I am pretty confident that they’re not going to get back to where they were two years ago. But that’s not necessarily a bad thing and indicates the economy will heal pretty well.

Question: Some say the price of concrete is going to increase like that of lumber. Can you explain the possible reason for that and what we might see?

Simonson: I’ve seen these 鈥渄ear valued customer鈥� letters in the last couple of weeks announcing that cement makers in different parts of the country are going to be raising prices anywhere from June 1 to September 1 anywhere from 5 percent to 10 percent.

This is very unusual. And to have it happen at this point in the building season, even near the end of what in northern states is the peak season, I think that’s also very unusual. But I would never say that it’s going to go up the way lumber did that. The demand for ready-mix and pre-cast and pre-stress concrete is much more stable than it is for housing. So I don’t foresee that kind of issue now. I would also say that 15 years ago I was involved in getting rid of a really self-damaging anti-dumping duty on Mexican cement that caused really unnecessary shortages and allocations in many parts of the country.

Since then, very large cement capacity has been built in some parts of the country. But you can still get localized shortages. We had a report that a major cement plant in the Dallas-Fort Worth area was damaged by that freeze in Texas that knocked out power. So you might even feel some impacts from that. Or if the Mississippi River dries up in the spring or floods, you may not get barges moving cement the way you need it.

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As contractors contend with project delays and cancellations in the wake of the coronavirus pandemic, many are still struggling to find skilled workers, according to a survey from the Associated General Contractors of America.

AGC in August polled more than 2,000 construction companies nationally on how they were faring during the COVID-19 pandemic. The group found 60 percent of companies have seen future projects delayed or canceled since the pandemic began last spring, while another 33 percent said they’d seen a project that was already underway shut down because of the coronavirus. Meanwhile, 52 percent of firms said they are still struggling with a problem that pre-dated the outbreak: a shortage of skilled labor.

鈥淔ew firms have survived unscathed from the pandemic amid widespread project delays and cancellations,鈥� said Ken Simonson, the association’s chief economist, in a statement. 鈥淚ronically, even as the pandemic undermines demand for construction services, it is reinforcing conditions that have historically made it hard for many firms to find qualified craft workers to hire.鈥�

Such a combination has amounted to a “one-two punch” for the construction industry, said Stephen Sandherr, the association’s CEO, and point to the industry’s need for federal help.

The survey shows many firms experienced project shutdowns or cancellations during the pandemic. Nationally, 66 percent of respondents said they’d seen similar project delays or cancellations.

Laborers, carpenters, and heavy equipment operators were the most in-demand craft positions, according to the survey.

The survey also asked companies what federal action they’d like to see to address the pandemic. Most respondents said federal infrastructure spending and rules blocking lawsuits over COVID-19 exposure in the workplace would help them recover from the pandemic.

鈥淭here is a lot that Washington (D.C.) officials can do to help boost demand for construction projects and get more people back to work rebuilding the economy,鈥� Sandherr said. 鈥淭he challenge is that the coronavirus has put many contractors in the position of looking for work and workers at the same time.鈥�

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