The construction sector in the United States will grow by about 4 percent next year, according to the new Dodge Construction Outlook, an annual forecast published by Dodge Data & Analytics. The projected growth rate is far to low to offset the losses of 2020, which saw the number of construction starts in the US dip by a significant 14 percent.
The Covid-19 pandemic is to blame for the contraction. In addition to starts being down, construction machinery sales also declined this year, as the general US economy—like its counterparts around the world—tilted toward a recession.
Richard Branch, Chief Economist for Dodge Data & Analytics, spoke about the impact of the pandemic on the industry, stating that a full recovery will take time and setbacks will occur.
“The COVID-19 pandemic and recession has had a profound impact on the U.S. economy, leading to a deep drop off in construction starts in the first half of 2020,” Branch explained.
“While the recovery is underway, the road to full recovery will be long and fraught with potential potholes. After losing an estimated 14% in 2020 to $738 billion, total construction starts will regain just 4% in 2021.”
Specifically, starts for single family housing will grow 7 percent (thanks to historically low mortgage rates), while multi-family housing starts will actually decline by a further 1 percent. Commercial building starts, meanwhile, are expected to increase by 5 points, with warehouse construction leading the way. There will be little to nothing gained in the realms of institutional construction starts, manufacturing plant construction and public works construction.
On the other hand, electric utilities and gas plants are expected to see 35 percent more construction starts, thanks to new liquid natural gas operations as well as new wind farms.
Again emphasizing the crushing impact of the coronavirus pandemic, Branch stated that other sectors are likely to bounce back more quickly than construction, particularly in the wake of a successful roll-out of a vaccine. There is also hope that Washington can get another economic stimulus bill passed by the New Year.
“Uncertainty surrounding the next wave of COVID-19 infections in the fall and winter and delayed fiscal stimulus will lead to a slow and jagged recovery in 2021,” Branch stated. “Business and consumer confidence will improve over the year as further stimulus comes in early 2021 and a vaccine is approved and becomes more widely distributed, but construction markets have been deeply scarred and will take considerable time to fully recover.”