What is the current COVID-19 economic impact on construction?
We participated in Steel Market Update's construction industry event this week, as construction accounts for ~40% of US steel demand. A late-April Coronavirus survey by the Associated General Contractors of America (AGC) highlights that 50% of ~850 respondents have halted current projects. Moreover, disruptions are increasing due to shortages of PPE, materials and workers. 49% of AGC Coronavirus survey respondents have received notice from a supplier stating deliveries will be late or cancelled. Among the positive impacts are 1) accelerated projects in response to the COVID-19 crisis, including highway and airport work; and 2) traffic reductions and substantial cost savings from fuel and raw material price declines.
What's the construction outlook for the rest of 2020?
Construction activity is poised to remain relatively weak for the rest of the year, as we expect a decrease in tax receipts should slow public spending. While the negative impact may be limited for select projects (e.g., K-12 education, water/sewer and more), many state and local projects will be postponed or cancelled altogether. The continuation of other infrastructure projects will depend on the amount of advanced or assured funding.