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 | Feb 5, 2020
Construction employment increases in 211 out of 358 metro areas from December 2018 to 2019
Dallas-Plano-Irving, Texas and Kansas City have largest gains; New York City and Fairbanks, Alaska lag the most as labor shortages likely kept firms in many areas from adding even more workers.
Market Data | Feb 4, 2020
Construction spending dips in December as nonresidential losses offset housing pickup
Homebuilding strengthens but infrastructure and other nonresidential spending fades in recent months, reversing pattern in early 2019.
Market Data | Feb 4, 2020
IMEG Corp. acquires Clark Engineering
Founded in 1938 in Minneapolis, Clark Engineering has an extensive history of public and private project experience.
Market Data | Jan 30, 2020
U.S. economy expands 2.1% in 4th quarter
Investment in structures contracts.
Market Data | Jan 30, 2020
US construction & real estate industry sees a drop of 30.4% in deal activity in December 2019
A total of 48 deals worth $505.11m were announced in December 2019.
Market Data | Jan 29, 2020
Navigant research report finds global wind capacity value is expected to increase tenfold over the next decade
Wind power is being developed in more countries as well as offshore and onshore.
Market Data | Jan 28, 2020
What eight leading economists predict for nonresidential construction in 2020 and 2021
Public safety, education, and healthcare highlight a market that is entering growth-slowdown mode, but no downturn is projected, according to AIA's latest Consensus Construction Forecast panel.
Market Data | Jan 28, 2020
Los Angeles has the largest hotel construction pipeline in the United States
Los Angeles will have a growth rate of 2.5% with 19 new hotels/2,589 rooms opening.
Market Data | Jan 27, 2020
U.S. hotel construction pipeline finishes 2019 trending upward
Projects under construction continue to rise reaching an all-time high of 1,768 projects.
Market Data | Jan 24, 2020
U.S. Green Building Council releases the top 10 states for LEED
Colorado leads the nation, showing how LEED green buildings support climate action and a better quality of life.