The economy reached its low point in April, during the worst of the coronavirus outbreak, and now seems on the road to some kind of recovery as summer begins. How far that road runs remains unknown. Some in the construction trades want the government to invest in projects to make sure the recovery continues.

The latest results from Clear Seas Research — the research arm of BNP Media, parent company to The ACHR NEWS — shows that operators in a range of businesses, including HVAC contractors and other home service businesses, saw only about half of their active business stay on schedule in mid-April, with cancellations reaching 19 percent. In a survey taken June 4 to June 8, 61 percent of active business was back on schedule, with only 13 percent cancelling. Delays declined to 26 percent from 33 percent in mid-April.

Planned business also improved considerably. Almost 60 percent of respondents said planned business was on schedule by June 8, up from the low of 45 percent in mid-April. Delays dropped to 28 percent from 38 percent and cancellations dropped to 12 percent from 17 percent.

New Business Demand Needs a Boost

New business development remains an issue, however. Activity did improve from April to June, according to Clear Seas Research, with 24 percent of respondents reporting an increase. But the number reporting declines was 60 percent. That is down from the high of 71 percent in April and the lowest since Clear Seas started this round of surveys in March. Still, it is a majority of respondents.

This worries the Association of General Contractors. The trade group, despite seeing a similar bounce-back in a survey of its members, warns this could prove temporary as projects reach completion and funds from the Payments Protection Program and other sources dry up.

“We think much more will be needed from the federal government to keep things going,” said Ken Simonson, AGC’s chief economist. “While the immediate crisis has passed, we are just now beginning to understand some of the longer-term economic impacts of the pandemic. Without additional help from Congress, the few gains this industry has made during the past few weeks will likely prove fleeting.”

Even with interest rates at all-time lows, private demand offers little certainty of improvement, Simonson said. Large commercial clients, such as the owners of shopping malls, hotels, and office buildings, face an uncertain future. The residential market might improve, but not immediately. Privately-owned housing starts were 23.2 percent lower in May than they were a year ago, the Census Bureau recently reported. Simonson said state and local governments are likely to suffer from a financial strain that will limit their construction projects.

Businesses Plan to Add Staff

Businesses that are less dependent on large projects are more optimistic. Clear Seas Research surveyed business leaders in several fields including HVAC, mechanical systems, and engineering. They found that half of respondents expect business to get back on track in less than six months, with another 14 percent saying their business hasn’t been impacted at all. Twenty-four percent of respondents at the start of June said they plan on adding staff in the next three months, up from 11 percent at the end of March, and 21 percent plan to rehire laid-off workers, up from 14 percent. Those planning to lay off some employees in the next three months declined to 17 percent to 25 percent; those planning to temporarily suspend employees with pay declined to 10 percent from 19 percent. The majority (34 percent) expect no change in their workforce in the next three months.

Business leaders are investing in their operations in other ways. Nineteen percent expect to increase their spending on equipment, products, and other areas. It was around 11 percent for all of April. Those expecting a decline in spending dropped to 55 percent at the start of June, the first time it was below 60 percent.

The way business is conducted changed as a result of the virus, with more embracing technology and taking a closer look at their suppliers. Two-thirds of Clear Seas Research respondents now use video chat/conferencing software. Fifty percent of the respondents pulled ahead in implementation of the technology due to the outbreak. The number of business leaders saying they are attending more webinars almost doubled from the end of March to the beginning of June, moving to 44 percent from 24 percent.

Owners Concerned About Online Security, Employee Health

With so much work taking place remotely in the past few months, cybersecurity is one of the few areas of concern that has increased since the end of March, Clear Seas research reports. And that is only a slight increase, going to 25 percent from 24 percent. The current economy remains the biggest concern, with 57 percent of respondents listing it as a top concern. That is down from 69 percent at the end of March.

As more workers start to return, maintaining a healthy workplace grows in importance. Almost half of the Clear Seas Research respondents said they are incorporating additional health and safety procedures into their business plans. Technology plays a role here, with 52 percent of respondents now moving more quickly to implement infrared fever warning systems.

Supply chain disruptions and other concerns have many business leaders re-evaluating their partner selection. Fifty-three percent said it was more important than before that a company they work with is based in the United States. Fifty-two percent said they were more concerned about capacity-availability than they were before.