Spending on nonresidential construction projects declined for the second month in a row in April as contractors coped with an all-time high for job openings, according to an analysis of federal spending data released by the Associated General Contractors of America. Association officials said workforce shortages are suppressing the amount of construction activity that can take place and called for measures to encourage more people to pursue high-paying construction careers.
“Nonresidential construction spending is being held back by a paucity of qualified workers, not a lack of projects,” said Ken Simonson, the association’s chief economist. “With job openings at an all-time high and the industry’s unemployment rate at the lowest ever for April, finding workers is contractors’ top concern.”
Construction spending, not adjusted for inflation, totaled $1.74 trillion at a seasonally adjusted annual rate in April, 0.2 percent above the upwardly revised March rate and 12.3 percent higher than in April 2021. However, the monthly gains were limited to private residential construction spending, which rose 0.9 percent for the month and 18.4 percent from April 2021. In contrast, private nonresidential construction spending dipped 0.2 percent from March, although the April total was 10.1 percent higher than in April 2021. Public construction spending slid 0.7 percent for the month but increased 1.8 percent from the year-ago level.
Job openings in construction at the end of April totaled 494,000, a 40 percent increase from April 2021 and the highest total for any month in the series, dating back to December 2000. Openings exceeded the 455,000 workers hired during the month, suggesting that contractors would have hired twice as many workers as they were able to find, Simonson noted. He said a major reason unfilled positions were at an all-time high was that the unemployment rate for jobseekers with construction experience set a record low for April of 4.6 percent.
The downturn in nonresidential construction spending was widespread. The largest segment, power—comprising electric, oil, and gas projects—slipped 1.5 percent in April. Highway and street construction edged down 0.2 percent. Spending on commercial construction—warehouse, retail, and farm projects—and on education structures each declined 0.4 percent. Among the five largest segments, only manufacturing construction increased, by 1.7 percent, propelled by a variety of factory projects.
Association officials said workforce shortages are now so severe they are undermining construction activity. They urged public officials to boost funding and support for construction education and training programs for students and adult workers. They also called on Congress and the Biden administration to work together to allow more workers with construction skills to legally enter the country in the short-term.
“We are ready to work with public leaders to undertake the long-term work of rebuilding the domestic pipeline for recruiting and preparing a new generation of construction professionals,” said Stephen E. Sandherr, the association’s chief executive officer. “But without short-term relief measures, like allowing more workers to legally enter the country, the economy will continue to suffer because we lack the people power to keep pace with demand for construction.”