88% say it is difficult to find skilled workers; 35% of them say they reject their work because of this

WASHINGTON, DC – Construction companies continue to face shortages of building materials like wood and steel, while volatility in construction product costs increasingly impacts business, according to the U.S. Chamber of Commerce for Commercial Construction (Index) data for the second quarter. This quarter, 84% of contractors faced at least one material shortage. Almost half (46%) of building contractors said decreased availability of construction products was a major concern lately, up from 33% in the same final quarter.

Despite the material challenges, the overall index value rose three points to 65 (the highest since a value of 74 in the first quarter of 2020 before the pandemic) and contractors are optimistic about the outlook for sales expectations, new business opportunities, hiring plans and equipment spending.

  • 89% of contractors report moderate to high confidence in new business opportunities in the next 12 months, up from 86% in the first quarter. Those who report a high level of confidence increased 10 points from the previous quarter to 34%.
  • Over half (52%) of contractors say they will hire more people in the next six months, up from 46% in the first quarter.
  • More contractors (39%) expect their sales to increase next year, up from 36% in the first quarter.
  • For the first time in a year, the proportion of contractors planning to spend more on tools and equipment in the next six months (44%) is higher than the proportion of those who say they will not spend more (42%).

“Businesses are booming as vaccines allow the economy to reopen completely. The rising optimism in the commercial construction industry reflects what we are seeing across the economy, ”said Neil Bradley, executive vice president and chief policy officer of the US Chamber of Commerce. “However, contractors are still faced with the challenge of coping with material shortages and finding enough skilled workers not to have to reject projects. For this reason, the US Chamber calls on elected executives at the federal and state levels to take action to deal with the labor crisis. ”

Material shortages are worsening

Most (84%) contractors say they have faced at least one material shortage, up from 71% in the first quarter. One in three (33%) has a shortage of timber / timber and 29% has a shortage of steel. Of the contractors with bottlenecks, 46% say they have a big impact on projects, up from 20% in the first quarter.

In addition, almost all (94%) contractors say that fluctuations in costs have moderate to strong effects on their business, 12 percentage points more than in the first quarter and 35 percentage points year-on-year. Wood / lumber and steel are the products of paramount importance.

Contractors face the labor shortage crisis

In the midst of a worsening personnel crisis, finding skilled workers for contractors remains a challenge. This quarter, 88% said they had moderate to high difficulty finding skilled workers, with nearly half (45%) saying they had a high level of difficulty. Of those who said they had difficulty finding skilled workers, over a third (35%) turned down their job because of a skills shortage.

Most (87%) contractors also report moderate to major concern about the cost of skilled labor. Of those who raised concerns, 64% said the cost has increased in the past six months, and more than three-quarters (77%) expect it to keep increasing in the next year.

Trade and customs concerns are mounting

During the quarter, contractors became increasingly concerned about the potential impact 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 impact, up from 35% in the first quarter. 40 percent now say new building materials and equipment tariffs will have a high to very high level of impact, up from 29 percent in the first quarter. And 30% expect a high impact from trade disputes with other countries, up from 19% in the first quarter.

About the index

The US Chamber of Commerce’s Commercial Construction Index is a quarterly economic index designed to gauge prospects and resulting confidence in the commercial construction industry. The index includes three leading indicators to measure confidence in the commercial construction industry and is a composite index on a scale from 0 to 100 that serves as a quarterly indicator of the health of the construction business segment.

The results for the second quarter of 2021 from the three main drivers are:

  • Revenue: Contractors’ revenue expectations for the next 12 months rose to 61 (four points more than in the first quarter).
  • Confidence in New Businesses: Overall contractor confidence increased to 62 (up three points from Q1).
  • Backlog: The ratio of the average current to the ideal backlog rose by three points to 72 (plus three points compared to Q1).

The study was developed with Dodge Data & Analytics (DD&A), the leading provider of intelligence and data for the construction industry, through interviewing commercial and institutional contractors.

Visit www.CommercialConstructionIndex.com for the full report, methodology and shareable graphs.