This year has been filled with uncertainty and has significantly damaged many industries, but so far the construction industry seems to be doing well. If you only watch the news or you talk to restaurant and bar owners it will seem like business has totally stalled, but talking to contractors, you will generally get the impression that things are ok. As we enter the fall of course, there is a lot of concern over whether these “decent” times will continue.
By late March most of the country had instituted some kind of Shelter in Place order. In the weeks after that construction activity as tracked by worker hours had declined most in early April – down approximately 17% nationwide. The dip was relatively short-lived though and by the end of May worker hours had rebounded. As of August total worker hours were 2% higher than the first week of March. It’s as if there was no pandemic.
There has been a disparity between the types of construction companies that have been affected most. Smaller companies (<$20M) were hit with the largest declines while larger companies saw more modest dips. As time passed by those differences were still there but parity has nearly been reached among different sized companies so that now all of them appear to be about on par for where they were in early March before any lockdowns.
Of course as we approach winter there is concern about whether the industry will continue its resilience. August saw 16,000 jobs added to payrolls which is a good sign however non-residential jobs saw declines. Nonresidential and infrastructure jobs decreased by 11,000 according to the Associated General Contractors of America.
A majority of firms have reported delays or cancelations of projects even though surveys show that 52% of firms struggle to find craft workers.* So challenges to planning and uncertainty about the course fo the pandemic have left much of the industry scratching their heads about what to do next.
Projections of future activity by PSMJ Resources’ forecast of proposed projects for architecture, engineering and construction companies saw a nearly 30% decline in backlogs indicating future slowdowns.
The Architectural Billings Index, long a bellwether resource for construction, stood at 40 for the month of June. Any score below 50 indicates that architects see declining billings, but the 40 also held signs of hope since it was a definite improvement over May’s 32 index number.**
Fortunately a variety of new forecasting tools have become available for the industry. The Associated General Contractors of America offers analysis and surveys and can be a go to resource but recently more private sector companies have offered high tech methods of tracking construction data in detailed ways that have never before been available. Companies like Procore, Multivista, OxBlue, Smarvid provide the industry with nearly real-time data.
Hopefully the industry will continue the pattern set so far during the pandemic even as we enter a challenging fall when Covid cases have already started to rise again. With new tools and insights contractors have greater ability to anticipate necessary changes as conditions continue to be so unpredictable.