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 | Mar 19, 2018
ABC's Construction Backlog Indicator hits a new high: 2018 poised to be a very strong year for construction spending
CBI is up by 1.36 months, or 16.3%, on a year-over-year basis.
Market Data | Mar 15, 2018
ABC: Construction materials prices continue to expand briskly in February
Compared to February 2017, prices are up 5.2%.
Market Data | Mar 14, 2018
AGC: Tariff increases threaten to make many project unaffordable
Construction costs escalated in February, driven by price increases for a wide range of building materials, including steel and aluminum.
Market Data | Mar 12, 2018
Construction employers add 61,000 jobs in February and 254,000 over the year
Hourly earnings rise 3.3% as sector strives to draw in new workers.
Steel Buildings | Mar 9, 2018
New steel and aluminum tariffs will hurt construction firms by raising materials costs; potential trade war will dampen demand, says AGC of America
Independent studies suggest the construction industry could lose nearly 30,000 jobs as a result of administration's new tariffs as many firms will be forced to absorb increased costs.
Market Data | Mar 8, 2018
Prioritizing your marketing initiatives
It’s time to take a comprehensive look at your plans and figure out the best way to get from Point A to Point B.
Market Data | Mar 6, 2018
Persistent workforce shortages challenge commercial construction industry as U.S. building demands continue to grow
To increase jobsite efficiency and improve labor productivity, increasingly more builders are turning to alternative construction solutions.
Market Data | Mar 2, 2018
Nonresidential construction spending dips slightly in January
Private nonresidential construction fell 1.5% for the month, while public sector nonresidential spending increased 1.9%.
Market Data | Feb 27, 2018
AIA small firm report: Half of employees have ownership stake in their firm
The American Institute of Architects has released its first-ever Small Firm Compensation Report.
Market Data | Feb 21, 2018
Strong start for architecture billings in 2018
The American Institute of Architects reported the January 2018 ABI score was 54.7, up from a score of 52.8 in the previous month.