COVID-19 National/International Trends and Hot Topics

AGC: 2021 Industry Outlook

Arlington, VA –  Most contractors expect demand for many types of construction to shrink in 2021 even as the pandemic is prompting many owners to delay or cancel already-planned projects. Few firms will hire new workers, according to survey results released by the Associated General Contractors of America and Sage Construction and Real Estate.

The findings are detailed in “The Pandemic’s Growing Impacts on the Construction Industry: The 2021 Construction Hiring and Business Outlook Report.”

“This is clearly going to be a difficult year for the construction industry,” said Stephen E. Sandherr, the association’s chief executive officer. “Demand looks likely to continue shrinking, projects are getting delayed or canceled, productivity is declining, and few firms plan to expand their headcount.”

The percentage of respondents who expect a market segment to contract exceeds the percentage  who expect it to expand – known as the net reading – in 13 of the 16 categories of projects included in the survey. Contractors are most pessimistic about the market for retail construction, which has a net reading of -64%. They are similarly concerned about the markets for lodging and private office construction, which both have a net reading of -58%.

Other construction categories with a high negative net reading include higher education construction, which has a net reading of -40%; public buildings, with a net reading of -38%; and K-12 school construction which has a net reading of -27%.

Among the three market segments with a positive net reading, two – warehouse construction (+4%) and the construction of clinics, testing facilities and medical labs (+11 %) – track closely with the few segments of the economy to benefit from the impacts of the coronavirus.

Firms report that many of their already-scheduled projects have either been delayed or canceled. Fifty-nine percent of firms report they had projects scheduled to start in 2020 that have been postponed until 2021; 44% report they had projects canceled in 2020 that have not been rescheduled; 18% of firms report that projects scheduled to start between January and June 2021 have been delayed; and 8% report projects scheduled to start in that time frame have been canceled.

Few firms expect the industry will recover to pre-pandemic levels soon. Only one-third of firms report business has already matched or exceeded year-ago levels, while 12% of firms expect demand to return to pre-pandemic levels within the next six months. Fifty-five report they either do not expect their firms’ volume of business to return to pre-pandemic levels for more than six months or they are unsure when their businesses will recover.

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