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 4, 2021
Nonresidential construction spending shrinks further in November
Many commercial projects languish, even while homebuilding soars.
Market Data | Dec 29, 2020
Multifamily transactions drop sharply in 2020, according to special report from Yardi Matrix
Sales completions at end of Q3 were down over 41 percent from the same period a year ago.
Market Data | Dec 28, 2020
New coronavirus recovery measure will provide some needed relief for contractors coping with project cancellations, falling demand
Measure’s modest amount of funding for infrastructure projects and clarification that PPP loans may not be taxed will help offset some of the challenges facing the construction industry.
Market Data | Dec 28, 2020
Construction employment trails pre-pandemic levels in 35 states despite gains in industry jobs from October to November in 31 states
New York and Vermont record worst February-November losses, Virginia has largest pickup.
Market Data | Dec 16, 2020
Architecture billings lose ground in November
The pace of decline during November accelerated from October, posting an Architecture Billings Index (ABI) score of 46.3 from 47.5.
AEC Tech | Dec 8, 2020
COVID-19 affects the industry’s adoption of ConTech in different ways
A new JLL report assesses which tech options got a pandemic “boost.”
Market Data | Dec 7, 2020
Construction sector adds 27,000 jobs in November
Project cancellations, looming PPP tax bill will undercut future job gains.
Market Data | Dec 3, 2020
Only 30% of metro areas add construction jobs in latest 12 months
Widespread project postponements and cancellations force layoffs.
Market Data | Dec 2, 2020
New Passive House standards offers prescriptive path that reduces costs
Eliminates requirement for a Passive House consultant and attendant modeling.
Market Data | Dec 2, 2020
Nonresidential construction spending remains flat in October
Residential construction expands as many commercial projects languish.