Demand for construction activities is deteriorating, according to a new survey by the Associated General Contractors of America (AGC) and data from construction technology firm Procore. The survey results came shortly after government data revealed construction employment decreased by nearly 975,000 in April. AGC chief economist Ken Simonson said the survey results and data show construction is not immune to the economic damage being inflicted by the coronavirus (COVID-19) pandemic.
The AGC's survey of over 800 construction firms revealed 30% of firms had projects halted by government order and 37% of firms had projects halted voluntarily by owners out of fear of the pandemic. Nearly one-third of respondents reported owners canceled projects because of a predicted reduction in demand. Cumulatively, two-thirds of surveyed firms reported having a project canceled or delayed since the outbreak of COVID-19 in early March.
As a result of production curtailments, 23% of firms reported cutting staff in March and 22% of respondents cut staff in April. Simonson said job losses may have been worse if not for the Paycheck Protection Program (PPP). According to the AGC survey, 80% of respondents reported applying for PPP loans, with the majority having their loan requests approved.
Despite success in applying for PPP loans, the AGC survey shows a general cloud of confusion surrounding details of the PPP. Nearly one in five respondents reported they are considering returning the funds because of vague guidance and the majority of these firms will be forced to cut employment after returning PPP funds. In total, over 10% of responding firms indicated they plan to make additional layoffs within the next four weeks.
"Unfortunately, our survey indicates that layoffs are continuing to occur throughout the nation," Simonson said. "Between March 1 and May 1, 39% of responding firms reduced their headcount. Reductions were particularly severe in the Northeast, where 53% of firms terminated or furloughed employees. The South had the fewest firms reporting staff reductions (29%), while 28% of firms in the Midwest and 45% in the West have reduced headcount."
A majority of respondents in the AGC's latest survey would like federal officials to take additional steps to prevent additional industry layoffs, chiefly by clarifying the guidance regarding the PPP. Additionally, 61% of responding firms said Congress should enact a "safe harbor" set of protocols to provide firms that are following safe practices with protection from tort of employment liability for failing to prevent a COVID-19 infection. One-third of respondents said they would like the government to enact a COVID-19 business and employee continuity and recovery fund.
The results of the AGC's 6th weekly survey were compiled via an online survey from May 4 to May 7.
