Despite stagnant activity in the nonresidential sector, construction spending in September reached a new seven-year high and climbed at the fastest rate since early 2006, according to an analysis by the Associated General Contractors of America (AGC). Total spending on nonresidential construction declined by 0.1 percent between August and September.

“Overall demand for construction continues to grow at a very robust rate,” says Ken Simonson, AGC chief economist. “It appears, however, that many firms performing private nonresidential work could not find enough qualified workers in September to keep pace with growing demand.”

Construction spending in September totaled $1.094 trillion at a seasonally adjusted annual rate, 0.6 percent higher than the August total and 14.1 percent higher than in September 2014. Simonson notes that the total was the highest since March 2008 and the year-over-year growth rate was the strongest since January 2006.

Private residential spending increased 1.9 percent for the month and 17.1 percent over the year. Simonson says demand for multifamily residential construction grew at a robust rate, 4.9 percent for the month and 26.7 percent year-over-year. Public construction spending rose 0.7 percent from a month before and 9.4 percent from 12 months earlier. Demand for educational facilities grew by 2.4 percent for the month and 10.5 percent for the year.

However, private nonresidential spending fell by 0.7 percent from August even as it remains 14.9 percent higher than a year earlier. Simonson notes that while spending on sectors such as lodging, manufacturing and offices experienced significant year-over-year growth, most categories saw a decline in spending between August and September as firms struggled to replace retiring workers amid growing labor market tightness. He adds that there were only 479,000 unemployed construction workers in September, the smallest September total in 15 years, according to data from the Bureau of Labor Statistics.