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
— 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
— 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
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.
Related Stories
Market Data | Jan 31, 2022
Canada's hotel construction pipeline ends 2021 with 262 projects and 35,325 rooms
At the close of 2021, projects under construction stand at 62 projects/8,100 rooms.
Market Data | Jan 27, 2022
Record high counts for franchise companies in the early planning stage at the end of Q4'21
Through year-end 2021, Marriott, Hilton, and IHG branded hotels represented 585 new hotel openings with 73,415 rooms.
Market Data | Jan 27, 2022
Dallas leads as the top market by project count in the U.S. hotel construction pipeline at year-end 2021
The market with the greatest number of projects already in the ground, at the end of the fourth quarter, is New York with 90 projects/14,513 rooms.
Market Data | Jan 26, 2022
2022 construction forecast: Healthcare, retail, industrial sectors to lead ‘healthy rebound’ for nonresidential construction
A panel of construction industry economists forecasts 5.4 percent growth for the nonresidential building sector in 2022, and a 6.1 percent bump in 2023.
Market Data | Jan 24, 2022
U.S. hotel construction pipeline stands at 4,814 projects/581,953 rooms at year-end 2021
Projects scheduled to start construction in the next 12 months stand at 1,821 projects/210,890 rooms at the end of the fourth quarter.
Market Data | Jan 19, 2022
Architecture firms end 2021 on a strong note
December’s Architectural Billings Index (ABI) score of 52.0 was an increase from 51.0 in November.
Market Data | Jan 13, 2022
Materials prices soar 20% in 2021 despite moderating in December
Most contractors in association survey list costs as top concern in 2022.
Market Data | Jan 12, 2022
Construction firms forsee growing demand for most types of projects
Seventy-four percent of firms plan to hire in 2022 despite supply-chain and labor challenges.
Market Data | Jan 7, 2022
Construction adds 22,000 jobs in December
Jobless rate falls to 5% as ongoing nonresidential recovery offsets rare dip in residential total.
Market Data | Jan 6, 2022
Inflation tempers optimism about construction in North America
Rider Levett Bucknall’s latest report cites labor shortages and supply chain snags among causes for cost increases.