US Construction Output Projected to Plummet 6.5% This Year

Construction in the US is projected to drop by 6.5% this year due to the pandemic, according to GlobalData.

The UK-based data and analytics firm also has forecast a 6.6% fall in construction output for all of North America this year, which is equivalent to a loss of $122.4 billion in projects. Before the coronavirus outbreak, construction in North America was expected to increase by about $12 billion. 

Canada is projected to see a 7% decline in construction output “owed in part to the collapse in global oil prices,” stated Dariana Tani, a London-based economist at GlobalData.

“Even though in most parts of the US and Canada all construction sites are allowed to carry on with their operations, an increasing number of projects in the bidding or final planning stages are being delayed or cancelled due to the uncertainty surrounding the economy as well as concerns that construction workers are being exposed to the virus,” Tani said in prepared remarks.

“Moreover, the closure of businesses across the region thanks to the enforced stay-at-home measures and the resulting surge in unemployment levels could see real GDP plunging by as much as 6.2% in Canada and 5% in the US this year,” she added. 

Construction in Mexico is expected to dip by 8%, according to GlobalData, which has forecast a 5.5% drop for construction throughout Latin America. 

“Slower global demand, plummeting commodity prices, and currency devaluations due to a surge in capital flights, combined with significant drops in tourism and remittance levels and rising unemployment are among the main factors expected to impact the industry in the short term,” Tani sated.  

She declined to provide details about the methodology behind GlobalData’s construction output projections. 

“Sorry, I can’t answer that question,” she wrote in an email. “We produce forecast data and that’s our estimations for the region.”

Construction output in the UK is expected to shrink by 5.8% this year, while GlobalData has forecast Asia’s output to decline by 0.9%. China’s construction is projected to grow 1.9% during 2020. 

“Although underlying drivers of growth include ongoing urbanization and the government’s efforts to renovate aging urban residential buildings, years of high levels of investment in real estate have resulted in oversupply, undermining the demand for new space,” stated Danny Richards, lead economist at GlobalData. 

But he added, “China is also set to boost investment in ‘new’ infrastructure to support the economic recovery and the acceleration in digital transformation, and notably, this will include investment in 5G networks and data centers.”