New report reveals construction contractors struggle to find workers, materials

Q3 2021 United States Chamber of Commerce Commercial Construction Index (CCI), released today, revealed that commercial construction contractors are seeing post-pandemic recovery slowing as challenges intensify, including worker shortages, material shortages and rising costs. .

Entrepreneurs’ concerns are reflected in the index score, which only increased by one point this quarter to reach 66. Two of the three main indicator scores (confidence in new business opportunities and backlog) are improved slightly, while the income score remained unchanged.

However, the overall score is still much lower than the pre-pandemic results. In Q1 2020, the CCI score was 74, which at the time was within the average score since CCI started in 2017.

Critical worker shortage worsens
Business entrepreneurs have always been concerned about having enough skilled workers to fill vacancies. These already strong concerns worsened this quarter.

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.

This lack of workers has an impact on the financial results of entrepreneurs. The lack of skilled workers led 42% of these entrepreneurs who said they had difficulty finding workers to refuse work, up from 35% in the second quarter. In addition, this quarter, 73% of entrepreneurs who say they have difficulty finding skilled labor say it is difficult to meet project deadlines (compared to 56% in the second quarter), and 59% report higher bids for projects (versus 50%). .

Costs and shortages of building materials compound problems for contractors
Contractors are also struggling to find materials to carry out their projects and are increasingly concerned about fluctuating costs.

A record 93% of contractors say they face at least one material shortage. In addition, a record 98% of contractors say that fluctuations in the cost of construction products have an impact on their business, up 35 points year-over-year.

Steel shortages overtake lumber, as tariff concerns escalate
Reversing a one-year trend, the product that most contractors are short of this quarter is steel (34%), followed closely by 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.

As steel shortages worsen, contractors increasingly worry about steel tariffs. 45% of entrepreneurs say steel and aluminum tariffs will have a high to very high impact on their business over the next three years, up 10 points from 35% in the first quarter of 2021.

What the experts say:

“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 halt our economic recovery in its tracks. We need to address our labor shortages, including doubling legal immigration, and addressing supply chain issues, including through tariff cuts. ”

Stock figures and key factors: slightly up this quarter

CCI’s overall score is 66 this quarter, up one point from the previous quarter. The other three key factors for the third quarter of 2021 are:

• Returned: The earnings forecast for entrepreneurs over the next 12 months has remained stable at 61.
• New business confidence: The overall level of entrepreneurial confidence rose to 64 (up two points from Q2 2021).
• Back: The current average order book to ideal order book ratio increased three points to 74 (up two points from Q2 2021).

More key findings:

• Capital expenditure decreases. 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 turnover to increase (37%) is down two points from the previous quarter, while more entrepreneurs (10%) expect a decline of their turnover, compared to 6% in the second quarter.

About the index:
The United States Chamber of Commerce Commercial Construction Index is a quarterly economic index designed to gauge the outlook and resulting confidence in the commercial construction industry. The research was developed with Dodge Data & Analytics (DD&A), the leading provider of information and data for the construction industry, by interviewing commercial and institutional contractors.

Visit http://www.CommercialConstructionIndex.com to access the full report, methodology and sharable graphics.