Potential Impact of COVID-19 on U.S. Construction Starts

By Richard Branch, Chief Economist, Dodge Data & Analytics

BEDFORD, MA – FEBRUARY 24, 2020 – The mounting number of cases of COVID-19 (Coronavirus) has roiled stock markets around the world and added concern that global economies will be materially impacted. Estimates from Moody’s Analytics suggest that first-quarter U.S. GDP growth could be reduced by nearly 0.45 percentage points as a result of the outbreak with tourism and travel taking the largest hit among U.S. industries. If the outbreak is contained quickly, U.S. economic growth should rebound in the second quarter.

The most notable impact comes from supply chains for goods from China. These supply chains have been crimped as Chinese workers remain at 德扑app安卓客户端home, causing production to fall substantially. Here in the U.S., General Motors unions have warned that U.S. production could slow as parts dry up. Apple Inc. announced that it will not meet its first-quarter revenue projections as their China plants are shuttered. Even N.H.L hockey players have noted the shrinking supply of hockey sticks. Consumer sentiment is also taking a hit. Should containment of the virus be elusive, we could see consumer spending and business investment sour — which could cause a further drag on U.S. economic growth.

The construction industry is also not immune to challenges presented by the outbreak. A rough calculation suggests that nearly 30% of products typically used in U.S. building construction are imports from China, making the country the largest single supplier to the U.S. If the virus is not quickly contained and quarantines remain intact, supplies will continue to tighten causing building costs to continue to escalate, and potentially causing projects to be delayed or cancelled outright. The exact extent to which this happens will depend on the ability of U.S. builders to substitute products from China to domestic or other international suppliers. Note though, that many Asian countries, such as Japan, South Korea, and Vietnam that also export building products to the U.S. rely heavily on raw materials from China.

At present, our outlook continues to expect a modest decline in construction starts in 2020. The current outbreak is one of many issues facing the U.S. economy this year that will lead to a slowdown in overall economic growth and push starts lower. The issue, however, remains in flux. Dodge will continue to assess the impact of the COVID-19 virus in the coming months.

 

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About Dodge Data & Analytics

: Dodge Data & Analytics is North America’s leading provider of commercial construction project data, market forecasting & analytics services and workflow integration solutions for the construction industry. Building product manufacturers, architects, engineers, contractors, and service providers leverage Dodge to identify and pursue unseen growth opportunities that help them grow their business. On a local, regional or national level, Dodge empowers its customers to better understand their markets, uncover key relationships, size growth opportunities, and pursue specific sales opportunities with success. The company’s construction project information is the most comprehensive and verified in the industry. Dodge is leveraging its more than 125-year-old legacy of continuous innovation to help the industry meet the building challenges of the future. Learn more at www.somethingwhimsy.com.

 

Media Contact

: Nicole Sullivan | AFFECT Public Relations & Social Media | +1-212-398-9680, nsullivan@affectstrategies.com


Greg Gies | Dodge Data & Analytics | Director Product Marketing | greg.gies@somethingwhimsy.com