The volume of nonresidential construction starts dropped from $30.2 billion in November to $20.8 billion in December, a decline of 30.9%, according to the construction information company ConstructConnect.
The COVID-19 pandemic dealt a severe blow to the construction industry, including a decline in the number of “mega” projects, defined as new projects costing $1 million or more, the company said in its January snapshot of the construction industry.
“In 2019, there were 35 mega project initiations summing to $79.1 billion,” the company said. “Last year, there were only a dozen such projects, combining for a value of $21.0 billion. The drop in megaproject dollar volume was 73.5%, or nearly three-quarters.”
Nonresidential starts for the entire year were down by 27.3%. And in the final month of 2020, the number of nonresidential starts dropped by nearly 50% from December 2019.
LOOKING AHEAD
Several factors will likely contribute to a brighter economic outlook for the construction industry in 2021, ConstructConnect said. Those factors included the advent of effective COVID-19 vaccines, pent up consumer demand for goods and services, and rising oil prices.
But the company said the first quarter would likely be weak.
“With a resurgence in COVID-19 case counts at the end of last year, which forced many restaurants and other enterprise re-opening efforts to be shelved or rolled back, total employment in the U.S. shrank by 140,000 jobs in December. (The net effect, though, was essentially zero, since November’s total jobs figure has most recently been revised upwards by +135,000 jobs from what was originally reported.),” the company said.
The United States’ total job recovery since the second quarter of 2020, when the floor fell out of the jobs market, is still only 52.1%, the company said. The leisure and hospitality sector of the economy, which was especially hard hit, has shed nearly one-quarter of all jobs over the past year.
In comparison, the construction industry lost only 1.9% of its jobs in the last year.
Construction added 51,000 new jobs in December, according to a ConstructConnect survey of employers. But despite those gains, the industry’s not-seasonally-adjusted unemployment rate rose to 9.6%, up from 7.3% in November and well above December 2019’s rate of 5.0%.