FMI Forecasts Downward Trend in Several Market Sectors Due to Coronavirus

Coronavirus / Market Forecast

March 17, 2020

FMI Forecasts Downward Trend in Several Market Sectors Due to Coronavirus

From an FMI broadcast email:

The more quickly we see a downward trend in the number of new Coronavirus cases, the more quickly the economy will stabilize and rebound. The level of government and public reaction to the outbreak will be the primary factors in how long infection levels continue to climb. A recession is the likely result, but since underlying economic fundamentals were strong going into the pandemic, there is a chance for a reasonably rapid rebound. 

Should the virus prove more deadly than currently believed and trigger increased panic, we can expect a prolonged recession and slower recovery.

Impact on A/E/C Markets—Ripple Effect Coming

• Hotel/Travel:  Travel-based businesses were already facing an uphill struggle in 2020. With major events of all kinds being shut down and corporate traveling falling off, the hotel industry will be hit hard. 
• Retail:  Some retailers, like Apple, Nike, and Urban Outfitters, are closing all stores until the end of the month, then will reevaluate.  Moves like this recognize not only safety for their staff and customers, but also the cautious spending that consumers will no doubt exhibit until the worst has clearly passed. 
• Manufacturing:  Global supply chains and operations around the world are being affected, with companies sourcing primarily from China at the highest risk. 
• Office:  Overall unemployment could tick up by about 1.5% in 2020 and clients could put the brakes on new projects while financing may become tight for new initiatives until the all-clear is given.
• Infrastructure:  According to a number of engineering firms we spoke with in the last 24 hours, infrastructure projects are still ongoing. As agencies adjust their own staff to virus policies, work will proceed.  But no one is making any promises.
• Healthcare and Higher Ed:  Typically stalwarts in a down economy, these markets will continue to provide opportunity for the A/E industry, but according to several firm leaders we spoke with in the last 24 hours, with schools and colleges shutting down and some hospitals shutting down construction inside facilities, a slowdown is likely, at least in the short-term. 

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