A first-quarter survey measuring the outlook for construction noted an about face among those who responded after March 15, compared with those who answered prior. Marcum LLP’s first Marcum National Construction Survey was conducted in the first quarter by the organization’s Construction Services group. Overall, the company reported in a press release, the survey “reflects a positive outlook...about the current and future state of the industry, despite the Covid-19 pandemic.”
Wrote Anirban Basu, Marcum’s chief construction economist, in the report:
“The pre-Covid-19 economy was blissful for many contractors. A combination of strong job growth, technology-induced transformation, and healthier state and local government finances, rising incomes, consumer confidence, low inflation, and minuscule interest rates propelled construction spending higher.
“The post-Covid-19 economy is the mirror opposite,” he said. “The second quarter of 2020 is likely to prove the worst quarter of our economic lives. By February, the nation was already in recession. U.S. GDP declined 4.8 percent for the quarter. Often, construction is spared during the early stages of a broader economic downturn due to a combination of ongoing work and backlog. That didn’t happen this time. Construction’s recovery will be far more rapid if two things occur: 1) federal stimulus directed toward state and local governments to help them balance their budgets; and 2) a federal infrastructure investment package.”
The report splits the findings of the survey into pre- and post-March 15 responses. Among those who responded prior to the Covid-19 pandemic, 82 percent projected either the same or higher backlogs for 2020. That percentage dropped to 67 percent for post-pandemic respondents.
Construction outlook affected by coronavirus
- 41 percent of pre-pandemic respondents chose “securing skilled labor” as the No. 1 threat to their businesses.
- 29 percent of post-pandemic respondents chose “lack of work” as the No.1 threat.
- 51 percent of respondents are increasing compensation to address the shortage of skilled labor.
- 85 percent of respondents said they were applying for loans under the Paycheck Protection Program (PPP) to mitigate the impact of the virus on their businesses.
- 56 percent of respondents said their top priority going forward is strategic planning.
“The industry was well-positioned prior to the pandemic, even with a potential recession looming,” said Joseph Natarelli, Marcum’s national construction industry leader, in a statement. “Those going into Covid-19 with weaker balance sheets will be negatively impacted. We believe that as long as firms work with their internal teams and professional advisors to address labor safety issues and material sourcing, and have a pandemic plan in place, they will come out of this in good shape.”
Marcum partner Roger T. Gingerich, regional construction leader for Ohio and survey project manager, said in a statement:
“When we distributed the survey in early February, the epicenter of the novel coronavirus was in China, an important hub for steel production and general manufacturing, and that country’s subsequent economic shutdown had an immediate ripple effect on the U.S. construction industry that still persists. With the exception of several regional markets hardest hit by the pandemic, where job sites were closed, most U.S. construction workers were deemed essential and have continued to work. In alignment with these developments, positivity among survey respondents began to dip by mid-March.”
Source Marcom LLP