Home improvement retailers have seen sales spike throughout 2020, with each month showing year-over-year highs since COVID-19 began. The story for America’s contractors has been more nuanced. Ken Simonson, chief economist for the Associated General Contractors of America (AGC), says it’s important for retailers to understand how their pro consumers are doing. Discover some of his key industry takeaways now.
01-Construction trade added 27,000 jobs in November.
In November, the construction trade added 27,000 jobs from October, according to data from the U.S. Bureau of Labor Statistics. Simonson says hiring is still 270,000 jobs below February levels and partly imbalanced.
“There has been a dichotomy between residential construction and employment for nonresidential construction like buildings, specialty trades and heavy and civil engineering,” he says. “Residential construction has added back 93 percent of the jobs it lost in February and March, while nonresidential construction has only added back 58 percent.”
02-New home construction demand remains strong.
“I expect demand for new homes, additions and renovations to remain strong,” Simonson says. “But most nonresidential construction is likely to remain in a slump until many other sectors have recovered.”
This trend follows previous patterns observed after the Great Recession, when construction employment didn’t hit its bottom until January 2011, a year after the trough in overall nonfarm payroll employment.
03-Total construction project spending was up in 2020.
Data from the U.S. Census Bureau shows total construction project spend in the first three quarters of 2020 was up 4.1 percent over the same time in 2019. Private nonresidential spending in particular rose nearly 8 percent.
As a new year begins, Simonson says home improvement retailers should know commercial remodeling will be a much stronger market than most other types of new nonresidential construction.
“This fact is going to provide opportunities but also challenges, since the quality of an item needed to remodel a large office building or hospital may exceed the capacity of the supply chain and cause delays for residential remodeling projects,” he says.