According to a report issued Monday from the U.S. Commerce Department, construction spending had a surprising 0.5% drop in the month of September to an annual rate of $1.574 trillion. The rate had grown by 0.1% in August.
The spending decreases were across the board: residential construction—which has been booming—slipped 0.4% to a rate of $773.5 billion, and non-residential spending dropped 0.6% to $456.4 billion. Public construction fell even further, by 0.7% to $343.7 billion.
In public spending, highway construction fell 0.7% but educational construction increased by 0.9%.
Economists’ initial evaluation is that expensive building materials and shortages led to the decreases in much of the spending. Residential construction contracted for the second straight quarter as both single-family home building was becoming more difficult and price hikes were discouraging remodelers and renovators. Likewise, spending on commercial and healthcare structures contracted in that same period.
Even private non-residential construction including gas and oil well drilling fell 0.6% in September.
Some of the shrink in the public sector comes as federal government spending had a precipitous loss of 4.3%.
Supply chain issues continue to be at the heart of material shortage discussions, and most economists and consultants agree that the supply chain problem is going to get worse before it gets better. Meanwhile, many structures are nearly completed but are waiting for crucial components before their owners can occupy them. It may be that the next year is going to be an even bumpier ride for construction companies than the last year has been.