Commercial Construction Outlook Optimistic
Data from the first quarter U.S. Chamber of Commerce Commercial Construction Index reveals contractors are growing more optimistic, mostly driven by a rise in revenue expectations. They also have better outlooks on hiring and equipment spending plans as business concerns related to the coronavirus pandemic lessen.
In the first quarter of this year, 36% of contractors expect their revenue to increase over the next year, a jump of 11 percentage points from 25% in Q4 2020. Most (86%) contractors also report a moderate to high level of confidence that the U.S. market will provide enough new business in the next year. Hiring plans are also positive as close to half (46%) of contractors say they will employ more people in the next six months, up from 37% in Q4 2020.
Skilled Worker Shortage Causes Ongoing Challenges
“As vaccines continue to roll out, contractors are expecting to hire more workers and anticipating good times ahead.” said U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley. “However, finding skilled workers was a critical issue before the pandemic, and while it has remained a chronic problem over the last year, heightened concern may be emerging again as contractors look to hire.”
Alongside the positive signs of recovery come workforce challenges. This quarter, 85% of contractors report moderate to high levels of difficulty finding skilled workers, up from 83% in Q4 2020. Of those, 45% report a high level of difficulty, up from 42% last quarter, but still down 10 percentage points year-over-year from 55% in Q1 2020 before the pandemic.
Lumber Concerns Ease, Cost Fluctuation Concerns Rise
Similar to last quarter, 71% of contractors say they face at least one material shortage. Of those, 22% are experiencing a shortage of wood/lumber (down from 31% in Q4 2020), followed by steel (14%), and pipe/PVC (10%).
This quarter, more (82%) contractors say cost fluctuations have a moderate to high impact on their business, up eight percentage points from Q4 2020, and up 17 percentage points year-over-year. Of those experiencing the impact of cost fluctuations, 43% said wood/ lumber is the product of most concern (down from 61% in Q4 2020), followed by steel (35%), and copper (27%).
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