flexiblefullpage
billboard
interstitial1
catfish1
Currently Reading

Commercial construction contractors upbeat on outlook despite worsening material shortages, worker shortages

Market Data

Commercial construction contractors upbeat on outlook despite worsening material shortages, worker shortages

88% indicate difficulty in finding skilled workers; of those, 35% have turned down work because of it.


By U.S. Chamber of Commerce | June 17, 2021

Contractors continue to face a shortage of building materials like lumber and steel, while cost fluctuations for the building products are having increasing impact on business, according to second quarter data from the U.S. Chamber of Commerce Commercial Construction (Index). This quarter, 84% of contractors are facing at least one material shortage. Almost half (46%) of contractors say less availability of building products has been a top concern lately, up from 33% who said the same last quarter. 

Despite the materials challenges, the overall Index score rose three points to 65 (its highest reading since a score of 74 in Q1 2020 ahead of the pandemic) and contractors are optimistic on outlook for revenue expectations, new business opportunities, hiring plans, and equipment spending.  

— 89% of contractors report a moderate to high level of confidence in new business opportunities in the next 12 months, up from 86% in Q1. Those indicating a high level of confidence jumped 10 points to 34% from last quarter. 

— Over half (52%) of contractors say they will hire more employees in the next six months, up from 46% in Q1. 

— More contractors (39%) expect their revenue to increase in the next year, up from 36% saying the same in Q1. 

— For the first time in a year, the percentage of contractors planning to spend more on tools and equipment in the next six months (44%) is higher than those who say they will not spend more (42%).  

“Businesses are experiencing a great resurgence as vaccines allow the economy to fully reopen. Rising optimism from the commercial construction industry reflects what we’re seeing across the broader economy,” said U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley. “However, contractors continue to face challenges navigating materials shortages and finding enough skilled workers to avoid having to turn down projects. That’s why the U.S. Chamber is calling on elected leaders at the federal and state level to take action to address the workforce crisis.” 

 

Materials Shortages Worsen 

Most (84%) contractors say they face at least one material shortage, up from 71% in Q1. One in three (33%) are experiencing a shortage in wood/lumber, and 29% are seeing a shortage of steel. Of those contractors experiencing shortages, 46% say they are having a high impact on projects, up from 20% saying the same in Q1.  

Additionally, almost all (94%) contractors say cost fluctuations are having a moderate to high impact on their business, up 12 percentage points from Q1 and up 35 points year-over-year. Wood/lumber and steel are the products of highest concern.  

 

Contractors Face Worker Shortage Crisis 

In the midst of a deepening workforce crisis, finding skilled labor continues to be a challenge for contractors. This quarter, 88% report moderate to high levels of difficulty finding skilled workers, of which, nearly half (45%) report a high level of difficulty. Of those who reported difficulty finding skilled labor, over a third (35%) have turned down work because of skilled labor shortages.  

Most (87%) contractors also report a moderate to high level of concern about the cost of skilled labor. Of those who expressed concern, 64% say the cost has increased over the past six months, and more than three-quarters (77%) expect it to continue to increase over the next year. 

 

Trade and Tariff Concerns are Up 

This quarter, contractors expressed increasing concern about the potential effect of tariffs and trade wars on access to materials over the next three years.  

More (45%) say steel and aluminum tariffs will have a high to very-high degree of impact, up from 35% in Q1. Forty percent now say new construction material and equipment tariffs will have a high to very-high degree of impact, up from 29% in Q1. And 30% expect high impacts from trade conflicts with other countries, up from 19% in Q1. 

 

About the Index  

The U.S. Chamber of Commerce Commercial Construction Index is a quarterly economic index designed to gauge the outlook for, and resulting confidence in, the commercial construction industry. The Index comprises three leading indicators to gauge confidence in the commercial construction industry, generating a composite Index on the scale of 0 to 100 that serves as an indicator of health of the contractor segment on a quarterly basis.   

The Q2 2021 results from the three key drivers are:  

— Revenue: Contractors’ revenue expectations over the next 12 months increased to 61 (up four points from Q1).  

— New Business Confidence: The overall level of contractor confidence increased to 62 (up three points from Q1).  

— Backlog: The ratio of average current to ideal backlog rose three points to 72 (up three points from Q1). 

The research was developed with Dodge Data & Analytics (DD&A), the leading provider of insights and data for the construction industry, by surveying commercial and institutional contractors.  

Visit www.CommercialConstructionIndex.com to access the full report, methodology, and shareable graphics.

Related Stories

Market Data | Mar 29, 2017

Contractor confidence ends 2016 down but still in positive territory

Although all three diffusion indices in the survey fell by more than five points they remain well above the threshold of 50, which signals that construction activity will continue to be one of the few significant drivers of economic growth.

Market Data | Mar 24, 2017

These are the most and least innovative states for 2017

Connecticut, Virginia, and Maryland are all in the top 10 most innovative states, but none of them were able to claim the number one spot.

Market Data | Mar 22, 2017

After a strong year, construction industry anxious about Washington’s proposed policy shifts

Impacts on labor and materials costs at issue, according to latest JLL report. 

Market Data | Mar 22, 2017

Architecture Billings Index rebounds into positive territory

Business conditions projected to solidify moving into the spring and summer.

Market Data | Mar 15, 2017

ABC's Construction Backlog Indicator fell to end 2016

Contractors in each segment surveyed all saw lower backlog during the fourth quarter, with firms in the heavy industrial segment experiencing the largest drop.

Market Data | Feb 23, 2017

Entering 2017, architecture billings slip modestly

Despite minor slowdown in overall billings, commercial/ industrial and institutional sectors post strongest gains in over 12 months.

Market Data | Feb 16, 2017

How does your hospital stack up? Grumman/Butkus Associates 2016 Hospital Benchmarking Survey

Report examines electricity, fossil fuel, water/sewer, and carbon footprint.

Market Data | Feb 1, 2017

Nonresidential spending falters slightly to end 2016

Nonresidential spending decreased from $713.1 billion in November to $708.2 billion in December.

Market Data | Jan 31, 2017

AIA foresees nonres building spending increasing, but at a slower pace than in 2016

Expects another double-digit growth year for office construction, but a more modest uptick for health-related building.

boombox1
boombox2
native1

More In Category




halfpage1

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021