Third Quarter Construction Economics: The Arguably Better, the Not So Bad, and the Downright Scary
Anirban Basu, Chief Construction Economist, Marcum LLP
Issue 33 – Third Quarter 2020
After two months of monumental job losses in March and April, the construction industry experienced historical job gains as 2020 approached its departure. The first two months of the pandemic witnessed the elimination of 1.1 million construction jobs. Between May and October, the industry recovered 73 percent of those lost positions. The construction unemployment rate, which rose from 5.5 percent in February to 16.6 percent in April, was down to 6.8 percent by October, the latest month for which these data are available. No major sector of the economy has recovered a higher proportion of its early-stage pandemic job losses as construction.
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The Arguably Better
After two months of monumental job losses in March and April, the construction industry experienced historical job gains as 2020 approached its departure.
The Not So Bad
Rising materials prices represent yet another risk facing nonresidential contractors going forward. Many contractors have expressed concern that global supply chain disruptions would produce a combination of materials shortages and rising prices.
The Downright Terrible
Recession or not, nonresidential construction is the weakest it has been in more than a decade. Commercial real estate has been hit particularly hard, with industry fundamentals in tatters as more people work remotely, more retailers go bankrupt, and hotels remain under-occupied.