Article source: ConstructConnect

Total US construction starts fell 22.3% year-on-year (y/y) in Q4 2020, taking the 2020 full-year decline to 18.3%. Non-residential building experienced the steepest decline, in both y/y terms in Q4 and for 2020 as a whole. The pandemic has weighed heavily on sectors such as hospitality, entertainment, retail and office working, with limited investment in new facilities in related sectors. Engineering construction contracted 30.3% y/y and 19.1% in 2020 overall, with the biggest drops seen in sectors related to new energy projects. Residential construction fell 1% y/y and averaged a 2.1% decline in 2020, with a marked recovery in the singlefamily segment seen towards the end of the year.

• With little economic momentum going into the year and a third wave of Covid infections limiting activity, GDP growth is expected to slow in the first quarter of 2021. However, a mix of fiscal stimulus and a gradual rollout of the vaccination program should lead to a mini economic boom this summer. Overall, we expect GDP to rise 4.2% in 2021 after a 3.5% contraction in 2020.
• US construction activity is forecast to post a “modest” rebound (relative to last year’s decline) in 2021 of 8.8%. However, the pandemic will leave severe scarring on the sector, with new construction not expected to reach its 2019 level until 2023. Civil engineering starts are expected to lead the pack, with only modest growth in non-residential building. Residential construction is expected to post the slowest growth, but against a background of a shallow decline last year, it is expected to rise above its 2019 level in 2021.
• Total construction starts in Canada in Q4 2020 declined 43.4% y/y and 22.3% in 2020 as a whole. All three headline sectors posted double-digit declines in 2020, with only activity in new residential construction showing a strong improvement by the end of the year.
• Canadian construction starts are expected to climb 11.5% this year, not rising above their pre-pandemic high (in 2018) until 2024. Like in the US, non-residential building will be the slowest to return to pre-pandemic levels, which is not expected over our forecast period to 2025. The scarring in the residential and civil engineering sectors will be less severe, with the former reaching its pre-pandemic high by 2024 and the latter by 2022.

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Article source: ConstructConnect

There have been two important U.S. economic data releases today: (1) advance estimates of Q4 and full year 2020 gross domestic product (GDP) growth; and (2) the latest weekly initial jobless claims number.

Both are set out in the standalone graphs below.

U.S. ‘real’ (after adjustment for inflation) GDP was +4.0% period to period annualized in Q4 2020, not so bad considering it was down by nearly a third (-31.4%) in 2020’s Q2.

More interesting, though, annual 2020 GDP was -3.5% vs 2019, not as steep a decline as was expected back in the Spring of last year.

In fact, -3.5% appears tame when compared with -11.6% in 1946, when WWII weaponry production ceased, and -12.9% in 1932, during the cold heart of the Great Depression.

Also, initial jobless claims delivered a result that was modestly upbeat. The latest weekly number on first-time unemployment insurance seekers moved in the right direction again, downwards.

It fell by -67,000 to 847,000, after climbing back up near a million in the prior week.

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