State of the Construction Industry: Will Nonresidential Construction Rebound in 2021?

There are reasons for both optimism and pessimism regarding nonresidential construction’s prospects in 2021. Perhaps that’s always the case, but forces of positivity and negativity are starker than usual this year. On the plus side of the ledger, expectations for surging economic activity later remain firmly in place. With vaccinations steadily becoming more pervasive and with more fiscal stimulus in the pipeline, the economy stands to be both supercharged and turbocharged at some point.

On the negative side of the ledger are a sea of leading indicators strongly suggesting that the near term will be challenging. Among these are the Architectural Billings Index produced by the American Institute of Architects and the Construction Backlog Indicator supplied by Associated Builders & Contractors.

Nonresidential construction spending declined nearly 5% in the first month of 2021. Among the most damaged segments were retail and traditional office space construction. Based on leading indicators, near-term dynamics will not be positive in many nonresidential segments. Among the exceptions are data centers and fulfillment centers as e-commerce and online retail has flourished in the wake of the pandemic.

The industry’s lingering malaise is apparent in employment data. Nonresidential construction employment declined by about 644,000 jobs between February and May of 2020 as the pandemic’s grip took firm hold. As of February 2021, the industry had recovered about 56% of those losses. Despite growing demand for workers in the single-family building sector, the nation’s construction unemployment rate stood at 9.6% in February of the current year, up 4.1 percentage points from the same time a year ago.

If you are a CFMA member login to continue reading this article. If you aren't a member yet and would like unlimited access to all of the content on, plus a variety of other benefits, join CFMA today!

About the Author

Anirban Basu

Anirban Basu is Chairman & CEO of Sage Policy Group, Inc., an economic and policy consulting firm in Baltimore, MD. He is one of the Mid-Atlantic region’s most recognizable economists in part because of his consulting work on behalf of such clients as prominent developers, bankers, brokerage houses, energy suppliers, and law firms.

Read full bio