Associated General Contractors of America (AGC) analyzed in its newsletter Feb. 14, ConstructConnect reported that the value of construction starts, not adjusted for inflation or seasonal variation, declined 6.6% year-over-year from January 2019 to January. The value of residential starts was flat, with single-family starts jumping 15% year-over-year and apartment starts plunging 32%. The value of nonresidential building starts tumbled 22% year-over-year, with commercial starts up 1.9%, institutional starts down 26%, and the volatile industrial category down 81%. The value of engineering (civil) starts rose 14% year-over-year. Chief economist Alex Carrick noted, “Since large project groundbreakings can often introduce notable volatility in the monthly starts numbers and their period-to-period percentage changes, it is informative to also study smoothed series. On a 12-month moving average basis, January 2020’s total nonresidential starts were 9.7% versus the previous 12 months (i.e., February-2019-to-January-2020 versus February-2018-to-January-2019)[, with] commercial, 3.1%; industrial, 31.4%; institutional, -0.2%; and engineering, 18.3%. The ‘smoothed’ grand total of starts, which includes residential, was 5.2% in January. As for residential activity, it was -2% on a 12-month moving average basis,” with multifamily down 5.2% and single-family down 0.5%.
For the second month in a row, job openings in construction declined year-over-year, the U.S. Bureau of Labor Statistics reported, and AGC analyzed. Openings in December 2019 totaled 239,000, not seasonally adjusted, down 60,000 (20%) from December 2018, but the second-highest December total in the 20-year history of the series. Contractors hired 278,000 employees in December, up 57,000 (26%) year-over-year and the most for December since 2005. Layoffs and discharges totaled 329,000, up 115,000 (54%) year-over-year and the highest December figure since 2016. Quits totaled 138,000, down 19,000 (-12%) year-over-year. Not-seasonally-adjusted data is not comparable across months in a year, and widespread harsh or mild weather can distort December-December comparisons.
According to AGC, the coronavirus does not appear to have had any measurable impact on U.S. construction so far but there are several ways it could potentially affect the industry, even if it does not become a widespread health threat in the U.S. Although construction is less dependent than other industries on China as the sole or major source of essential materials or components, a prolonged disruption to production in China or shipment of goods to the U.S. could cause delays in delivery of machinery, repair parts or projects. There is also some risk to specific construction projects. Transportation and distribution firms, hotels, resorts, retailers, colleges and other entities that rely on Chinese goods, visitors and spending might defer or cancel projects, either because of immediate cash-flow constraints or longer-term loss of business.