Construction recovery slows down: Marcum index


The Marcum Commercial Construction Index for the third quarter of 2021 shows that the construction industry’s recovery slowed in the summer amid labor shortages and rising material prices.

Construction spending on non-residential buildings remains 10.7 percent below the January 2020 level, but only 1.3 lower than a year ago.

The index is compiled by Marcum’s National Construction Services Group.

“The non-residential segment created 33,000 net new jobs in October 2021 and offers 46,500 more jobs than in October 2020,” said Anirban Basu, Marcum’s chief construction economist and author of the report. “But much of this growth is in the heavy and civil engineering sub-segment, which is largely driven by public finance. Employment in non-residential construction, which is largely supported by private investment, only increased by 4,700 jobs last year. “

Dr. Basu points out that, as it has done since the pandemic began, the housing sector continues to outperform the non-residential sector. “Employment in residential construction has exceeded employment growth in non-residential construction since the beginning of the pandemic. Of the 169,000 jobs the construction industry has created since October 2020, 122,800 (72.6 percent) were in the housing sector, ”he said.

The recovery in construction employment has not been uniform across the country.

“Among the top 20 metropolitan areas in the United States, the four with the highest construction job growth since the pandemic began – Minneapolis, Detroit, Chicago and St. Louis – are all in the Midwest. Aside from Houston, which saw the biggest drop in employment due to disruptions in the energy sector, coastal MSAs such as New York, Los Angeles and San Francisco did the worst. These were among the communities that were closed the most in the early stages of the pandemic, “said Dr. Basu.

Inflation and sluggish supply chains continue to be problems for both the construction industry and the economy as a whole. “The recent surge in energy prices strongly suggests that contractors, consumers and other economic actors will face inflationary pressures for much of 2022, and this trend can be seen in the latest producer price index data, which suggests that wholesale prices for non-residential construction increased. “20.2 percent from September 2020 to September 2021,” said Dr. Basu.

Source: Marcum


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