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July 31st, 2020 | by NEWCAAssociated Builders and Contractors (ABC) released data analysis Thursday revealing economic contraction during the second quarter of 2020 caused hits to the construction industry, including interruption of services and “the possibility of outright cancellation.”
ABC Chief Economist Anirban Basu stated, “While there was relatively greater damage done to industries such as retail and hospitality during the second quarter, construction activity also fell dramatically. A number of key construction segments like office, lodging and commercial were hit especially hard by the pandemic.”
Basu expounded on recent data from the U.S. Bureau of Economic Analysis (see chart below), including nonresidential and residential fixed investment, which contracted by 27.0% and 38.7%, respectively, as well as investment in nonresidential fixed structures, which contracted by 34.9%.
“Despite construction’s status as an essential industry in most cities and states,” Basu continued, “the sector did not escape the wrath of COVID-19 during the worst economic quarter on record.”
Interruption of services stemmed from “lack of available inputs as global supply chains buckled, project postponements or cancellations, jobsite workforce issues or state and local government mandates,” Basu said. Project cancellation remains a looming threat as “obtaining project financing becomes more challenging and vacant office and retail space accumulates."
Read more about the data and its implications here.