Labor & Material Analysis – Q4 2020

Hello 2021!

Q4 of 2020 followed a similar trend as the previous quarter.

Construction recovery continues and unemployment has dropped. However, material prices and availability continue to be a challenge. (SLAM CS tracks material costs and lead time monthly. You can find that here.)

Wall Street and Main Street are more optimistic with discussion by the Federal Government for additional stimulus measures to combat the effects of COVID-19. Vaccinations to fight COVID-19 is underway.

In general, it is believed the recovery will continue through late 2021.

The construction industry added 51,000 jobs to the employment roles in December continuing the upward direction of the recovery. At this time the construction employment industry is a net reduction of 1.9% from its December 2019 pre Covid-19 level.

Industry Confidence Index is up 2 points continuing the trend up since it’s low in Q2 of 2020. Firms in the construction industry are slightly more optimistic that things have stabilized. Although not by much. 

The stock market continues to grow which could be due to additional government stimulus. With the new Biden Administration and democratic majority of the United State Senate, there is talks / plans of additional stimulus to support citizens, businesses, state and town governments in the attempt to lessen the damage from COVID-19.

U.S. inflation is down, year over year 2019 to 2020. 2020 represented an annual inflation factor of 1.4%

Connecticut Unemployment: The CT unemployment rate held close to Q3 to end at 8.2%.  (7.8% in September, 6.1% in October, 8.2% in November)

National Unemployment: Down to 6.7% from its previous level of 7.8% at the end of Q3. 

Considerations

POSITIVES

• Unemployment continues to drop.
• Construction industry has added jobs.
• Stock market continues to rise.
• COVID-19 vaccinations are underway.

NEGATIVES:

• COVID-19 is still front and center for most states even though the vaccines are being implemented.
• Vaccines for lower risk / general public are still pending.
• Concerns regarding COVID-19 are stronger at this time due to the winter months.
• Material availability impacted by COVID-19 is still a concern. Both high prices and difficulty in availability will negatively impact projects moving forward.

Summary Opinion:

As stated in our previous report, we still believe that the first half of 2021 would be an advantageous time to bid and /or start a construction project. Qualified construction firms will be continuing to pursue work to build their backlog. This increase in competition will benefit owners and help blunt material price increases and lost efficiencies due to COVID-19 mitigation strategies.