- U.S. Chamber of Commerce finds improved optimism among commercial contractors
- Majority of contractors expect there to be adequate business and stable or improved revenues in the coming year
- Shortages in skilled workers and materials continue to pose challenges
Summary by Dirk Langeveld
Commercial contractors are more optimistic about the year ahead as concerns over the COVID-19 pandemic ease, according to the U.S. Chamber of Commerce Commercial Construction Index. However, contractors continue to face challenges in finding qualified workers and acquiring materials.
The index, which has the key drivers of revenue, new business confidence, and backlog, stood at 62 in the first quarter of 2021 – up three points from Q4 2020 but 12 points below the pre-pandemic reading in Q1 2020.
Eighty-six percent of commercial contractors showed a moderate or high level of confidence that there will be enough new business in the coming year, including 24 percent with a high level of confidence. Eighty-seven percent said they think their revenues will increase or stay the same, with 36 percent saying they think their revenues will improve – up 11 points from Q4 2020.
Forty-six percent said they plan to hire new workers, with another 46 percent expecting to maintain their current workforce. Just 3 percent said they expect to cut workers, down from 12 percent in Q4 2020.
Finding skilled laborers remained a top concern for the industry. Eighty-eight percent reported a moderate or high level of concern about their workers having adequate skills, and 85 percent reported similar difficulties in finding skilled workers.
Eighty percent said they were still experiencing delays due to the pandemic, with 58 percent saying worker health and safety was their top concern. Fifty percent said they were concerned about project delays or shutdowns, 35 percent said they were concerned about fewer building projects, and 33 percent said they were concerned about scarcer building materials.
Seventy-one percent said they were facing shortages of at least one material, although this issue was slightly less pressing. Twenty-two percent said they were encountering lumber shortages, down nine points from Q4 2020.
Cost fluctuations were putting greater pressure on commercial contractors at the start of the year, with 82 percent saying they were having a moderate or high impact on their business – up eight points from the previous quarter and 17 points from Q1 2020. Forty-three percent said fluctuations in lumber costs were a concern, down from 61 percent in Q4 2020. Thirty-five percent said they were concerned by price fluctuations in steel and 27 percent had a similar concern regarding copper prices.
Thirty-five percent said they were worried about the potential for steel or aluminum tariffs to have a major impact on their business. This share was up 11 points compared to Q4 2020.
Thirty-seven percent said they plan to spend more on equipment and tools in the coming year. This was up from 28 percent in Q2 2020, but down from 54 percent in Q1 2020.
