Nonresidential construction spending has increased to an all-time high, despite a variety of market pressures, including the mounting fallout from COVID-19.
“For the first time in history, the volume of nonresidential construction spending exceeded $800 billion on an annualized basis and now stands at an all-time high,” says Associated Builders and Contractors Chief Economist Anirban Basu. “Both public and private nonresidential construction spending expanded to start 2020, a reflection of the broader economic momentum evident over the last several years.”
Joshua Reap, president and CEO of Associated Builders and Contractors NH/VT (ABC NH/VT) in Concord, says, at a state level, the backlog of projects already in the pipeline extends through 2020 and into 2021, based on a recent survey of members.
This time last year, companies were trying to map out strategies for dealing with tariffs, but the dust has settled as exceptions have been granted for certain products and industries.
But the coronavirus pandemic has begun to hit the supply chain. “What you might start to see is a slowdown in production and shipment of lighting fixtures, for example,” says Reap. “Even as China starts to turn the corner, there is still factory ramp up time and catching up on existing orders before they can meet current demand.”
One area of global conflict may actually help the construction industry. Although it may not last, a price war between major oil producers in Saudi Arabia and Russia has lowered energy costs. “We benefit from their fight,” he says. ABC NH/VT also generates a “construction confidence index,” which analyzes sales growth and expected profit margin. “Our contractors stillfeel very optimistic, and there is plenty of opportunity,” Reap says.
Current Issue - May 2024