AASHTO Journal - AGC Survey Tracks Slippage in Construction Demand

A new survey by the Associated General Contractors of America, along with data from construction technology firm Procore, indicates that demand for construction is “deteriorating” across the country – albeit unevenly – with the loss of 975,000 construction jobs from March to April this year; constituting nearly 13 percent of the industry’s employment, by far its worst one-month decline ever.

[Above photo by the Iowa DOT.]

“Our survey results and Procore’s data make it clear that the construction industry is not immune to the economic damage being inflicted on our country by the pandemic,” said Ken Simonson, AGC’s chief economist, explained in a conference call on May 8. “Without new federal help, it is hard to see a scenario where the construction industry will be able to recover any time soon.”

He added that the COVID-19 pandemic is forcing many state and local governments to curtain capital expenditures for infrastructure projects “for the foreseeable future” as well.

This is one reason why he said AGC supports the request by state departments of transportation for $50 billion to cover the funding gap created by a steep drop-off in motor vehicle travel, which has sliced motor fuel tax collections and toll receipt collections.

“COVID-19 has been disruptive to the construction industry across the board, affecting the transportation, healthcare, emergency, and non-infrastructure sectors,” Simonson said. “That’s put the industry overall in a downturn.”

He added that the unemployment rate in the construction industry jumped from 4.7 percent in April 2019 to 16.6 percent at present and that 67 percent of the construction firms polled by AGC report having a project canceled or delayed since the start of the outbreak in early March.

“Unfortunately, our survey indicates that layoffs are continuing to occur throughout the nation,” Simonson noted. “Between March 1 and May 1, 39 percent of responding firms reduced their headcount. Reductions were particularly severe in the Northeast, where 53 percent of firms terminated or furloughed employees. The South had the fewest firms reporting staff reductions – 29 percent – while 38 percent of firms in the Midwest and 45 percent in the West reduced headcount.”

He emphasized that the federal government can, and should, take additional steps to help avoid more layoffs and economic hardship in the construction sector. “The construction industry’s job losses have little to do with temporary work-stoppages, but a lot to do with longer-term economic problems that will not end with the stay-at-home orders,” he stressed.