Home » Behind the Headlines » Construction Spending Forecasts for 2020 Do Not Support Jobs Growth

Construction Spending Forecasts for 2020 Do Not Support Jobs Growth

1-31-20

A current article and several others, based on a sentiment survey, state that there will not be enough construction workers to support growing construction activity next year. I dispute that claim. 

Construction is in demand – but who’s going to do all the work?

I’ve been writing about the disparity in jobs growth exceeding construction activity growth for more than two years. Construction activity has NOT been increasing to support jobs growth.

Spend Sector Constant2017 monthly 2015-2021 1-31-20

2020 Construction Spending Increases, but Volume is Down

Expect Construction Jobs Growth to Slow in 2020

To Support Construction Jobs, We Need Volume

There are other construction forecasts that support my argument. It’s important to point out that my forecast is the HIGHEST for 2020. So, just keep in mind, if you consider any other forecast, the condition gets worse.

Seven of the eight firms that provided a forecast for the AIA Consensus Forecast are lower than Construction Analytics forecast for nonresidential work in 2020. AIA Consensus > marked slowdown for nonresidential building

ConstructConnect’s forecast is lower than my forecast for all sectors ConstructConnect’s Winter 2019-20 Put-In-Place Construction Forecasts

FMI’s forecast is lower for all sectors FMI U.S. Engineering and Construction Outlook: Third Quarter 2019 Report

Overall, Construction Analytics 2020 forecast shows a volume gain of 0.6%. Spending increase 4.6%, but average inflation is 4%. Therefore volume increases only 0.6%. That would support growth of about 50,000 jobs. Residential and Non-building Infrastructure show slight gains in 2020 but Nonresidential buildings volume is in it’s 4th year of decline.

ConstructConnect shows a total spending increase of 1.9% and FMI shows a total spending increase of 1%. Both show a slight gain in volume in at least one sector, but with expected inflation of around 4%, both would indicate an overall decline in volume and a decline in jobs.

Spending needs to increase greater than inflation to realize an increase in volume. If volume does not increase, there is no support to add jobs.


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