Problems with the Delta variant and the supply chain could disrupt profits
TRD
New York
The US construction industry can thank residential projects for a surge in spending. However, the upturn may prove short-lived.
U.S. construction spending rose 9 percent year-over-year in July to $1.57 trillion on a seasonally adjusted basis, according to the latest Commerce Department report. Most of the increase came from residential construction, which jumped 26.5 percent. Nonresidential construction spending fell 4.2 percent.
The risks of a resurgence of the coronavirus and supply chain difficulties could torpedo profits, according to Associated General Contractors of America.
“The rapid spread of the delta variant of Covid-19 is causing a setback in reopenings and travel, which may lead some building owners to postpone new projects,” said Ken Simonson, the group’s chief economist. “Meanwhile, rising material prices, limited supply of key materials, and long or uncertain lead times are hindering the industry’s recovery.”.
Private construction spending increased 13.6 percent year-over-year to an annual rate of $1.23 trillion. Within that category, private residential construction spending rose 27 percent annually, while private non-residential spending fell 3.6 percent.
Government spending fell at an annual rate of 5.1 percent to $337.8 billion, as road construction declined to $94.5 billion and education fell to $79.7 billion. Residential government spending fell 4 percent, while non-residential government spending fell 5 percent.
