Although contractors have slowly started returning to construction projects across the country, many predict that the industry will see a severe drop in demand later in the year.
Contractors expect there to be a slump in new jobs as banks, developers and property owners remain cautious about an economic recovery, according to the Wall Street Journal. The slowdown would also impact industries that depend on construction such as manufacturers, machinery dealers and suppliers.
Some banks have already stopped processing loans, and construction on some projects has been put off for six months or a year or cancelled altogether. The monthly billings index from the American Institute of Architects also dropped to its lowest-ever level in March, and demand for construction equipment has also fallen. Machinery manufacturer Caterpillar Inc. saw a 27 percent drop in sales during the first quarter.
Construction tends to be one of the last industries to struggle and one of the last industries to recover during a recession due to how long it takes to plan, fund and develop projects. Executives and analysts predict that a similar lag will take place now, according to the Journal.
“The next 18 months for construction is setting up to be quite horrible,” chief economist for the Associated Builders and Contractors trade group Anirban Basu said. [WSJ] — Eddie Small