Materials, cost fluctuations dog contractors
84% in U.S. Chamber of Commerce survey report difficulties
A continuing shortage of construction materials and cost fluctuations remain top of mind for contractors across the United States, according to the U.S. Chamber of Commerce’s second-quarter Commercial Construction Index.
According to a chamber survey, 84% of contractors are facing at least one material shortage. Almost half (46%) say less availability of building products has been a top concern lately, up from 33% who said the same in the first quarter.
Most (84%) contractors say they face at least one material shortage, up from 71% in the first quarter. Some 33% are experiencing a shortage in wood/lumber, and 29% are seeing a shortage of steel. Of those contractors experiencing shortages, 46% say they are having a high impact on projects, up from 20% saying the same in the previous quarter.
Additionally, almost all contractors (94%) say cost fluctuations are having a moderate to high impact on their business, up 12 percentage points from Q1 and up 35 points year-over-year. Wood/lumber and steel are the products of highest concern.
Despite the materials challenges, the overall index score – a measure of how optimistic contractors are – rose three points to 65, its highest reading since a score of 74 in the first quarter of 2020, before the pandemic. Some 89% of contractors report a moderate to high level of confidence in new business opportunities in the next 12 months, up from 86% in the first quarter. Those indicating a high level of confidence jumped 10 points to 34% from last quarter.
Over half (52%) of contractors say they will hire more employees in the next six months, up from 46% in Q1.
More contractors (39%) said they expect their revenue to increase in the next year, up from 36% saying the same in the first quarter.
In addition, the chamber survey found, for the first time in a year the percentage of contractors planning to spend more on tools and equipment in the next six months (44%) is higher than those who say they will not spend more (42%).
Another nagging concern is a deepening workforce crisis, as the search for skilled labor continues to be a challenge for contractors. This quarter, 88% report moderate to high levels of difficulty finding skilled workers, of which, nearly half (45%) report a high level of difficulty. Of those who reported difficulty finding skilled labor, over a third (35%) have turned down work because of skilled labor shortages.
The chamber also reported that contractors expressed increasing concern about the potential effect of tariffs and trade wars on access to materials over the next three years.
Visit www.CommercialConstructionIndex.com to access the full report, methodology, and shareable graphics.