Steel Markets

AGC: April Nonresidential Construction Drops to a Two-Year Low

Written by David Schollaert

June 1, 2021

Nonresidential construction spending hit a two-year low in April, down for a fifth consecutive month due to supply-chain woes and soaring costs, according to the Associated General Contractors of America (AGC). Extended delivery and production times as well as fast-rising materials prices caused demand to wane across several public and private project categories.

“Both public and private nonresidential spending overall continued to shrink in April, despite a pickup in a few spending categories from March,” said Ken Simonson, AGC’s chief economist. “Ever-growing delays and uncertainty regarding backlogs and delivery times for key materials, as well as shortages and record prices, are likely to make even more project owners hesitant to commit to new work.”

Construction spending in April totaled $1.52 trillion at a seasonally adjusted annual rate, up 0.2% from the pace in March and 9.8% higher than the pandemic-depressed rate in April 2020, AGC said. Private nonresidential construction spending fell 0.5% from March to April and 4.8% since April 2020, with year-over-year decreases in 10 out of 11 subsegments.

“As has been true for the past several months, the year-over-year gain was limited to residential construction”, Simonson noted. “That segment climbed 1.0% for the month and 29.5% year-over-year. Meanwhile, combined private and public nonresidential spending declined 0.5% from March—the fifth consecutive monthly decrease—and 3.9% over 12 months, to the lowest annual rate since December 2018.”

Public construction spending slipped 2.2% year over year and 0.6% in April. Among the largest segments, highway and street construction declined 2.7% from the same year-ago period, although spending rose 0.6% in April. Public educational construction decreased 4.0% year-over-year and 0.5% for the month. Spending on transportation facilities fell 1.9% over 12 months and 1.2% in April.

AGC officials have urged the Biden administration and Congress to boost infrastructure investments, remove tariffs on key materials and take steps to address production and deliver backups for key construction supplies.

“The last thing construction workers need is for the Biden administration to double tariffs on lumber,” said Stephen Sandherr, AGC’s CEO. “Instead of making it even harder to build, the administration needs to ease supply backups, remove tariffs and pass a bipartisan infrastructure bill.”

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

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