LONDON, UNITED KINGDOM -- GlobalData recently revised its forecast for North America’s construction industry to -1.7% this year from the previous projection of -6.5% in the Q2 2020 update, as the recovery in the U.S. residential market from the initial shock of the COVID-19 pandemic has been faster than expected.
Dariana Tani, economist at GlobalData, said, “The U.S. residential market has been benefiting from an increase in pent-up demand for new homes, record-low interest rates and the noticeable shift in remote working, which have prompted many renters and first-time buyers, who have held on to their jobs and wealth, to look for more affordable and larger living spaces in lower density markets.”
The U.S. construction industry is now expected to fall by -1.1% in 2020 and -0.8% in 2021 compared to the previous forecast of -6.5% and -2% projected earlier this year. However, concerns over the upcoming elections and congress failure to pass another stimulus package remain major near-term risks to the outlook.
“High unemployment rates and the continued rise in new COVID-19 cases across the country is expected to keep undermining business and consumer confidence and keep a large segment of potential buyers on the side-lines,” Tani said.
In Canada, GlobalData now expects construction output to contract by 5.4%, up from the -7% expected in the previous forecast update. Canada’s construction activity has been recovering since May as many provinces across the country started to ease restrictions in the sector; however, in July, the level of activity was still slightly lower than in February, before the COVID-19 pandemic emerged while building permits and employment levels continued to rise albeit at slower rates.
“Overall, the short-term construction outlook for North America remains highly uncertain: the Coronavirus is still spreading throughout the U.S., while in Canada, infection rates have spiked in recent weeks,” Tani said. “This will continue to limit the recovery of the industry and the wider economy as the degree of social distancing (both voluntary and compulsory) will prevail until a vaccine becomes available.”