Joe Dardis is AISC’s senior structural steel specialist for the Chicago market.

As the majority of U.S. adults have now received the COVID vaccination, things appear to be inching back to normal. But just how hard did COVID hit and how far have we come back? This edition of Data Driven will shed some light on where we were a year and a half ago and where we are now.

TO SAY THAT COVID-19 SENT SHOCKWAVES through the domestic construction industry and the economy as a whole would be an understatement.

At the onset of COVID, just before the second quarter of 2020, U.S. GDP dropped 31.4%, the largest decline since the Great Depression. Luckily, it bounced back in the very next quarter--by an unprecedented 33.4%--and has continued to show healthy growth through the first quarter of 2021.

Percent Change in U.S. GDP

When it comes to construction, commercial construction starters (excluding single-and multi-family housing) decreased 16% from 2019 to 2020 despite the fact that pre-pandemic first-quarter 2020 construction starts were up 9% year over year from 2019.

Starts appear to be on the upswing, however, as Dodge Data and Analytics predicts they will grow 10% by 2022 and hit nearly pre-pandemic levels by 2023. Other market indicators are also providing optimism. The Dodge Momentum Index, a monthly measure of the initial reports for nonresidential building projects in planning and a leading indicator of construction spending by up to a full year, reached its recent low in June of 2020 and remained relatively stagnant until November. But since then, it has seen a 22% increase, indicating promise for construction activity for 2021 and 2022.

Historical and Projected Construction Starts

Dodge Momentum Index

Architecture Billing Index

Steel Capacity Utilization in U.S.

The Architectural Billing Index (ABI), which is derived from shifts in billings from architectural firms, is another useful economic indicator for tracking nonresidential construction activity/ While the ABI fell to an all-time low in April 2020, it has been steadily climbing ever since, reaching one of the highest-ever reported index scores (58.5) in May. This indicates that more architecture firms are seeing an increase in their billings, and more projects are entering the planning and design phases. Like the Dodge Momentum Index, this is a very positive indicator for the rest of 2021 and moving into 2022.

COVID created another shockwave in the form of significant supply chain issues for a variety of industries, including construction. As demand for some goods and services dropped sharply at the onset of COVID, so did manufacturing and output. However, demand picked up again relatively quickly and outpaced the reduced output. The steel industry was no exception, with capacity utilization for all steel products (not just construction) hovering around 80% for all of 2019 and the first quarter of 2020 before taking a sharp drop to around 55% in April 2020. While this caused an increase in steel prices and much higher-than-normal lead times for products, production has caught back up and the steel industry is now producing slightly more than it was right before COVID struck. It will take time for supply and demand to reach equilibrium, but this increase in production points to a much less strained supply chain in the near future.

Of course, construction recovery typically lags behind overall economic recovery. So while we’ve seen recent GDP growth and other optimistic indicators, the construction industry will still need time to catch up, especially with respect to employment numbers. Luckily, the extreme data points created by COVID appear to be leveling out, and the construction industry’s recovery is beginning to take shape.