Following the announcement by the US Bureau of Statistics that construction spending fell by 2.1% in May from a month earlier:
Dariana Tani, Economist at GlobalData, a leading data and analytics company, offers her view on the situation:
“May’s construction spending data shows the ongoing weakness in the US construction industry amid the COVID-19 pandemic. Overall, construction spending was driven down by a decline in spending on private construction projects offsetting an increase in spending on public projects.
“GlobalData expects the US construction industry to contract by -6.5% in 2020 and -2% in 2021, down from the previous growth forecast of 0.6% and 1.4% before the COVID-19 pandemic started. Sectors such as commercial, residential and industrial are anticipated to be the hardest hit amid the collapse in business and consumer confidence, while sectors such as institutional and infrastructure will also be affected although to a lesser extent.
“As Congress and the White House contemplate the next phase of yet another unprecedented government response to limit the economic impact of the COVID-19 outbreak, Democrats and President Donald Trump are increasingly raising the prospects of passing a multi-trillion dollar infrastructure plan that could generate millions of jobs and stimulate the economy and the construction industry. However, key risks remain. With the number of new COVID-19 cases surging across the country, as many states are reopening their economies, the construction industry is expected to continue to decline over the coming months.
“A second wave in the second half of 2020 and the potential increase of caseloads in underserved communities could put at risk the recovery of the labor market and increase the risk that the pandemic could result in long-lasting damage to the economy as new lockdown restrictions will have to be put in place again. Furthermore, heightening political uncertainty over the upcoming presidential election, lower oil prices, and financial volatility are other factors that could undermine confidence.”
Related Stories
Market Data | Dec 3, 2020
Only 30% of metro areas add construction jobs in latest 12 months
Widespread project postponements and cancellations force layoffs.
Market Data | Dec 2, 2020
New Passive House standards offers prescriptive path that reduces costs
Eliminates requirement for a Passive House consultant and attendant modeling.
Market Data | Dec 2, 2020
Nonresidential construction spending remains flat in October
Residential construction expands as many commercial projects languish.
Market Data | Nov 30, 2020
New FEMA study projects implementing I-Codes could save $600 billion by 2060
International Code Council and FLASH celebrate the most comprehensive study conducted around hazard-resilient building codes to-date.
Market Data | Nov 23, 2020
Construction employment is down in three-fourths of states since February
This news comes even after 36 states added construction jobs in October.
Market Data | Nov 18, 2020
Architecture billings remained stalled in October
The pace of decline during October remained at about the same level as in September.
Market Data | Nov 17, 2020
Architects face data, culture gaps in fighting climate change
New study outlines how building product manufacturers can best support architects in climate action.
Market Data | Nov 10, 2020
Construction association ready to work with president-elect Biden to prepare significant new infrastructure and recovery measures
Incoming president and congress should focus on enacting measures to rebuild infrastructure and revive the economy.
Market Data | Nov 9, 2020
Construction sector adds 84,000 workers in October
A growing number of project cancellations risks undermining future industry job gains.
Market Data | Nov 4, 2020
Drop in nonresidential construction offsets most residential spending gains as growing number of contractors report cancelled projects
Association officials warn that demand for nonresidential construction will slide further without new federal relief measures.