By Richard Branch, Chief Economist Dodge Data & Analytics
NEW JERSEY — JANUARY 11, 2021 — U.S. economy lost 140,000 jobs in December as the economy downshifted in the face of rising COVID-19 cases across the country. The construction sector was one of the few bright spots during the month as it gained 51,000 jobs. Still, construction has added back less than 80% of the jobs lost in March and April.
Other data from the construction sector suggests construction has not escaped the distress from COVID-19. The Dodge Momentum Index, a leading indicator on nonresidential building activity, finished 2020 4.8% below where it was at the end of 2019 – a gap that would have been much wider if not for robust activity in the warehouse market. Outside of building related to e-commerce, planning for both commercial and institutional building has struggled to gain traction in the midst of weak economic growth.
Construction starts (ground breakings) also suffered greatly during the year. Building starts posted significant declines in 2020 with only single family housing and warehouse activity showing strength. Nonbuilding (infrastructure) starts also languished as state and local revenues declined.
The December jobs report is a poignant reminder that the U.S. economy was in precarious shape as 2020 ended due to the new wave of COVID-19 cases spreading rapidly across the country. For the first time in nearly a year, however, we can say that the immediate future looks brighter. The $900 billion stimulus plan approved by Congress at the end of 2020 will provide meaningful support for individuals and businesses. Further deployment of vaccines will also lead to a more rapid recovery as the year progresses. While it will be a long road back to full recovery, the construction sector is poised for a return to growth in 2021.
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Allison Heard | 104 West Partners | firstname.lastname@example.org
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