Nonresidential structures rise only 3% in Q4 2020

The construction industry, and the US economy as a whole, are still rebounding from 2020

Nonresidential investment in structures increased at a 3% annualized rate in Q4 2020, which is a small step in the right direction after the sector saw losses of 33.6% and 17.4% in the Covid-19-affected second and third quarters, respectively.

According to Associated Builders and Contractors (ABC), the slight uptick in nonresidential structures in Q4 is in line with the modest growth (4%) of the U.S. economy by gross domestic product (GDP) in the same time frame (see the full statistics in the table below).

Still, after the GDP rebounded by 33.4% in Q3, to only rise incrementally the following quarter is a sign that the economy – and, by extension, the construction industry – is still “beset by uncertainty and interruption,” according to ABC Chief Economist Anirban Basu.

“Some observers may say that the economic recovery that began in May 2020 is neatly in place, but that is simply not true,” Basu said.

In addition to the 3% expansion of nonresidential investment in structures, ABC reported that residential investment increased by 33.5% in Q4 – a sector that plummeted by 35.6% in Q2 and rose by 63% in Q3.

According to the indices by ABC and the American Institution of Architects, contractors could still see tough times as the industry fully recoups its strength, and Basu indicated office, lodging and shopping center segments as particularly vulnerable.

Basu said construction industry stakeholders are looking to Washington, D.C., “in the hope that a meaningful infrastructure package is forthcoming.”

Nonresidential contruction increased by 3% in Q4 2020