The chief economist for Dodge Data & Analytics offered an outlook for the US construction industry in 2020 on Oct. 31, and his perception is that there will be a decline in most sectors – but this slowdown will not be a severe crash and, in part, is caused by a skilled labour shortage.
“The recovery in construction starts that began during 2010 in the aftermath of the Great Recession is coming to an end,” said Richard Branch at the 81st annual Dodge Outlook Conference in Chicago.
“Easing economic growth driven by mounting trade tensions and lack of skilled labor will lead to a broad based, but orderly pullback in construction starts in 2020,” Branch said. “After increasing 3 per cent in 2018 construction starts dipped an estimated 1 per cent in 2019 and will fall 4 per cent in 2020.”
“Next year, however, will not be a repeat of what the construction industry endured during the Great Recession. Economic growth is slowing but is not anticipated to contract next year. Construction starts, therefore, will decline but the level of activity will remain close to recent highs. By major construction sector, the dollar value of starts for residential buildings will be down 6%, while starts for both nonresidential buildings and non building construction will drop 3%.”
The pattern of construction starts for more specific segments is as follows:
In his presentation, Branch provided a word graph indicating that construction executives currently believe the skilled labour shortage is their greatest impediment to growth. However, there are other factors and risks, including increased trade tensions and monetary policy challenges, that could add to economic stresses in the months ahead.
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