3 Factors that Will Shape Construction Industry Recovery in 2021 — and How Sureties Can Help
2020 was supposed to be a year of moderate growth for the construction industry. In December of 2019, The American Institute of Architects projected a 1.5% increase in spending across non-residential projects. That figure has since been revised to a decrease of 11%.
The U.S. construction industry has been hit hard by the economic shutdowns ordered to slow the spread of the novel coronavirus, and the recovery is expected to be steady but slow. Surety underwriters are paying close attention and preparing for a tough 2021.
“I’m anticipating a 5 to 10% drop-off at least in surety premiums across the industry,” said Kevin McCann, Vice President, Chief Contract Officer Surety Division at Philadelphia Insurance Companies. “The work will come back, but it’s going to take discipline from both contractors and surety providers to manage through the losses and maintain a steady pace of recovery and growth.”
That pace depends on a number of variables, from the impact of vaccines on economic activity, to the availability of public funding and courtroom determinations of liability for project delays. Here are a few of the factors to watch in 2021 that will shape the overall health of the construction industry and how surety providers respond to support contractors in the future:
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