This article from constructconnect.com written by Kendall Jones covers the state of the construction industry, one year into the COVID-19 pandemic.
It’s been a little over a year since the World Health Organization declared COVID-19 a pandemic. In the days and weeks that followed, we started to get a feel of how it would impact our lives as states began issuing stay-at-home orders, mandating people shelter in place except for essential work and activities.
This forced many businesses to have to halt operations and many workers started to make the transition to working from home. For the most part, construction activity was deemed essential, although there were a handful of states and cities that categorized it as nonessential in the beginning.
And while construction projects in progress continued, with enhanced safety protocols on jobsites in place, projects in the design and bidding phases were heavily impacted as projects began being delayed or put on hold.
Questions and uncertainty over how long the pandemic would last and what the economic impact would be caused many owners to rethink starting new projects or moving forward on anything not already under construction.
So, where does the construction industry stand one year later? As the rollout of vaccinations continue and states start easing more and more pandemic-related restrictions and things start to reopen, it feels like we are slowly progressing toward whatever our new normal might look like.
Here’s a brief look at what the overall impact COVID-19 had on the construction industry and where it stands today.
Construction Spending
Despite the pandemic, construction spending increased in 2020. Total construction spending last year was $1.43 trillion, a 4.8% increase over total construction spending in 2019. The increase in construction spending last year was due mostly to the almost 12% increase in residential construction put-in-place which totaled $813.9 billion in 2020. Nonresidential construction dropped 0.04% in 2020 with the drops in spending for lodging, office, commercial, manufacturing, educational construction projects.
Construction spending in 2021 has gotten off to a good start as well with the seasonally adjusted annual rate of construction spending totaling $1.52 trillion in January.
It’ll be worth watching to see what impact soaring construction materials prices will have on construction spending moving forward. According to the Producer Price Index, final demand construction is only up 1.0% from a year ago despite some massive price hikes for materials like softwood lumber which is up 79.7% from a year ago.
Construction Starts
Construction starts, on the other hand, have not fared as well as construction put-in-place spending. ConstructConnect’s nonresidential construction starts were $386.6 billion in 2020, down 27% compared to 2019. For February 2021, nonresidential construction starts totaled $18.5 billion, down 34.6% from January 2021’s $28.3 billion and down 38.5% from February 2020’s $30.1 billion.
ConstructConnect’s construction starts compile the total estimated dollar value and square footage of all new project groundbreakings in any given month. They lead, by nine months to as much as two years, put-in-place statistics which record monthly spending on projects in progress as they proceed through completion.
Basically, starts records the total cost of projects the month it starts and put-in-place records what was spent each month. So, in 2020 total nonresidential put-in-place was $813.9 billion versus starts that totaled $386.6 billion.
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