Construction output is expected to drop by 6.6% in 2020, the equivalent of US$122.4 billion, due to the rapid decline in demand for new projects and safety regulations related to the Covid-19 pandemic.
According to data and analytics company GlobalData, the latest forecast is down sharply from the previously expected rise of 0.6% (US$12 billion) prior to the outbreak.
“Canada is projected to see the steepest decline in output (7%) owed in part to the collapse in global oil prices, while construction output in the US is projected to decrease by 6.5%,” explains Dariana Tani, economist at GlobalData.
“Even though in most parts of the US and Canada all construction sites are allowed to carry on with their operations, an increasing number of projects in the bidding or final planning stages are being delayed or cancelled due to the uncertainty surrounding the economy as well as concerns that construction workers are being exposed to the virus,” she continues.
“Moreover, the closure of businesses across the region thanks to the enforced stay-at-home measures and the resulting surge in unemployment levels could see real GDP plunging by as much as 6.2% in Canada and 5% in the US this year.”
According to a Procore survey of US and Canadian senior executives in the construction owner and developer space, reported in Forbes, respondents have seen a shutdown in construction sites, with 37% of ground-up and 46% of capital improvement projects on hold. Results indicated owners are going to reduce their investments this year by an average of 32% compared to their initial 2020 plans.
Reports said the majority of owners expect their capital spend in 2021 to be less than that in 2019. Though most also expect to see project delays, supply chain disruption, and funding source tightening, the good news is that 81% do expect an economic rebound before the end of the year .
A survey by the Associated General Contractors of America (AGC) and data from construction technology firm Procore has found that 975,000 construction workers in the US lost their jobs in April 2020.
The AGC said the findings highlighted the need for government action to protect workers’ livelihoods, maintain infrastructure funding and exempt employers from liability if an employee catches the coronavirus.
The association’s data found that unemployment among those with recent construction experience rose by 1.1 million over the past year, reaching 1,531,000, and that unemployment in the sector rose to 17% from 5% in April 2019.
The job losses were smallest in southern states, where 29% of companies in its survey cut jobs, compared with 38% of firms in the Midwest and 45% in the West.
Ken Simonson, the AGC’s chief economist, said: “Today’s jobs report, our new survey results and Procore’s data make it clear that the construction industry is not immune to the economic damage being inflicted on our country by the pandemic.
“Without new federal help, it is hard to see a scenario where the construction industry will be able to recover any time soon.”