New Construction Industry Data Provides Ray Of Hope For Development's Short-Term Future
The American construction industry had a major comeback in the month of August.
Construction starts and jobs both increased from July, and the construction backlog lengthened to eight months, according to a series of reports compiled by Construction Dive. Taken together, the trends represent an industry making strides to recover from the nationwide shutdown of most construction projects in March, but not all the way back quite yet.
The eight-month backlog is a small increase from July's number of 7.8, but still a half-month year-over-year decrease from August 2019, Associated Builders and Contractors found in its monthly report. The 19% increase in construction starts from July to August, estimated by Dodge Data & Analytics, could be written off entirely as delayed projects catching up if the backlog had decreased further.
Construction starts for residential buildings in August skewed heavily toward multifamily, as single-family home starts decreased 3% from July while apartment buildings increased 62% month to month, Dodge reports. Overall, residential construction starts in the first eight months of the year decreased by less than 1% compared to the same time period in 2019.
Though social distancing measures have highlighted the idea that construction sites may become more automated, the industry still managed to recover about 59% of the jobs it lost during March and April, or about 639,000 jobs, according to Marcum's Q2 report. Construction unemployment sits at 8.9%, healthier than the overall U.S. unemployment rate of 10.2%.
While the story on the ground has improved, experts still warn that the macroeconomic conditions that inform long-term development decisions remain poor, with the potential to worsen further.
Gross private investment in nonresidential structures, which Marcum calls the most applicable figure for construction, shrunk 35% from the first to second quarter, while the national gross domestic product contracted 9.5%, just shy of the 10% line that typically denotes an economic depression, Marcum reports.