AGC Survey Measures Impact of Virus on Construction

Simonson said three-quarters of construction owners in the September survey said they have had a project postponed or canceled, up from 60 percent in August and 32 percent in June. Eight percent report a cancellation or postponement of a project scheduled out as far as July 2021 or later.

Seventy-eight percent of respondents said they have projects under way that have been delayed or disrupted. Of that total, 42 percent cited shortages of construction, materials or parts and 34 percent cited the difficulty of finding craftworkers and/or subcontractors.

The strongest areas of nonresidential construction continue to be the building of distribution centers and data centers. As online shopping increases during the pandemic, so does the need for last mile warehousing and internet support. Firms report projects for commercial remodeling to facilitate social distancing, screening and testing facilities, said AGC. Medical facility expansions are expected to decline due to reduced revenue as patients delay routine appointments and elective procedures.

As current projects are completed, the prospects for new projects become scarcer, said Simonson. Optimism is down in the face of uncertain demand conditions. Thirty-four percent of firms in the survey do not expect business volume to return to pre-pandemic levels for at least a year. A majority of firms plan to cut staffing or freeze hiring during the coming year. Twenty percent of respondents said they will reduce headcounts and 42 percent said they will maintain current employment levels.

The migration of urban dwellers to the suburbs supports mostly residential construction but has ancillary benefits to nonresidential in areas of road construction, underground utilities, etc. Shortages of lumber have impacted home building, but AGC sees the segment continuing to be robust.

Employment levels for nonresidential construction declined 0.02 percent, according to September data, and are expected to remain flat or decline in October. Residential construction employment is increasing faster than the overall economy and was up 2.9 percent at the end of the third quarter, said Simonson.

AGC said federal relief measures are needed in all sectors of the construction industry, including new federal investments in infrastructure, liability reforms that protect responsible firms from frivolous coronavirus suits, a new highway and transportation bill and another round of Paycheck Protection Program loans.

When asked which might better serve the construction industry, a Trump or Biden administration, Simonson started by noting the current administration’s failure to deliver on an infrastructure package.

“Four years ago, we heard about a record infrastructure package and heard about it right through 2019, but the Trump administration never came forth with a detailed package, never worked to persuade Senate Republicans to pass something,” said Simonson. “Former Vice President Joe Biden has made it clear he supports a broad range of infrastructure work including funding for transportation, electrical storage facilities and renewable energy. Enactment of a bill, however, will depend on the composition of the Senate. Legislators can move fast when aligned with the president, otherwise it can take a long time.”

“As our survey shows, the pandemic and efforts to mitigate its spread have deeply wounded the economy, depressing demand for many types of commercial construction projects,” said Stephen E. Sandherr, AGC’s chief executive officer. “Congress can end the downward economic slide and help create needed new construction jobs by passing measures to boost demand and protect honest employers.”

View the AGC survey results. View the metro employment 12-month data, rankings, top 10, and map.