Commercial construction contractors struggle to find workers and materials for salvage hold

Faced with escalating challenges, including labor shortages, material shortages and rising costs, commercial construction contractors are seeing a slowdown in the pace of their recovery from the pandemic, according to data from the third quarter of the U.S. US Chamber of Commerce Commercial Construction Index (Index).

Almost all (92%) entrepreneurs report some level of difficulty finding skilled workers, but this quarter 55% report high difficulty levels – a 10 percentage point jump from the second quarter. Labor shortages prompted 42% of entrepreneurs who said they had trouble finding workers to turn down work, up from 35% in the second quarter.

In addition, a record 93% of contractors report facing at least one material shortage. Prices are also a concern. A record 98% of contractors say fluctuating construction product costs impact their business, up 35 points year-over-year.

Entrepreneurs face concerns about supply chains, worker safety and talent shortages as they seek to recover from the pandemic. They say declining availability of building products / materials is, by far, their main concern (62%) linked to the COVID-19 pandemic, followed by worker health and safety concerns (38%) and an increase in labor shortages (37%).

“This quarter’s index results demonstrate the fragility of our economy’s recovery after the COVID-19 pandemic. And unfortunately, these trends are not limited to the commercial construction industry, ”said Neil Bradley, executive vice president and director of policy for the US Chamber of Commerce.

“In all sectors of the economy, companies face enormous difficulties in finding skilled labor. Supply chain shortages and mounting inflationary pressures threaten to stop our economic resurgence in its tracks, ”he continued.

Entrepreneurs’ worries are reflected in the index score, which rose only one point this quarter to 66. Two of the three major indicator scores – confidence in new business opportunities and backlog – improved slightly, while the income score remained unchanged.

However, entrepreneurs see improvements in the longer term. Ninety percent of entrepreneurs report moderate to high confidence in the market’s ability to deliver new business over the next year, up one point from the second quarter. Project delays due to the pandemic also continue to improve: 60% are experiencing delays (compared to 72% in Q2), with an average share of 15% of delayed projects (compared to 17% in Q2).

Other results include:

• Steel is replacing lumber as the most reported shortage. Reversing a one-year trend, the commodity that most contractors experience a shortage of is steel (34%), closely followed by lumber / lumber at 31%. Since the third quarter, lumber has been the most frequently reported shortage. Last quarter, 33% of contractors reported a lumber shortage, 29% reported a steel shortage.
• Concerns about steel tariffs are growing. As steel shortages worsen, 46% of contractors say steel and aluminum tariffs will have a high to very high impact on their business over the next three years, up 11 points compared to 35% in the first quarter of 2021.
• Labor shortages impact businesses. This quarter, 73% of entrepreneurs who report difficulty finding skilled labor say it is difficult to meet project deadlines (up from 56% in the second quarter), and 59% have higher bids for projects (against 50%).
• Capital expenditure is falling. More entrepreneurs are saying they are withdrawing their purchasing plans this quarter: 40% say they will increase their spending on tools and equipment in the next six months (compared to 44% who said they will increase their spending in the next six months). second trimester).
• Entrepreneurs are less confident in their income expectations. The percentage of entrepreneurs who expect their income to increase (37%) is down two points from the previous quarter, while more entrepreneurs (10%) expect their income to decline , compared to 6% in the second quarter.