Report: 82 percent of contractors have ‘moderate to high’ confidence in U.S. market

Chart: U.S. Chamber of Commerce

The U.S. Chamber of Commerce Commercial Construction Index increased by one point to 57 in the third quarter, and saw notable gains in two of index’s three indicators.

The U.S. Chamber of Commerce Commercial Construction Index is a quarterly economic index designed to gauge the outlook for, and resulting confidence in, the commercial construction industry.

Index indicators

Confidence in new business increased 6 points to 56 in the third quarter, compared to 50 in the second quarter, and revenue expectations rose 4 points to 48, from 44 in the second quarter.

However, while those two indicators were up, current backlog dropped by 5 points to 68, following a posting of 73 in the second quarter. The U.S. Chamber of Commerce notes that impact to backlog may lag several months due to project delays.

Even with the third-quarter uptick, the index remains well below the score of 74 from the first quarter of this year.

Outlook

Eighty-two percent of commercial construction contractors have moderate to high confidence that the U.S. market will provide sufficient business opportunities in the next 12 months, up from 75 percent in the second quarter, according to the U.S. Chamber of Commerce.

In addition, 60 percent of contractors expect revenues to remain about the same over the next 12 months, while 22 percent an increase in revenues – up from 17 percent in the second quarter.

Furthermore, 62 percent of contractors reported that cost fluctuations have a high or moderate impact on their business – up from 59 percent in the second quarter – and 60 percent of contractors say project shutdowns or delays are a top concern for their business.

“The loss of new projects and revenue has been severe for the commercial construction industry, but we may be turning the corner,” the U.S. Chamber of Commerce says in a statement. “Contractors’ more positive outlooks on new business and revenue suggest the construction industry is part of a broader economic recovery post-COVID, although industries including travel, entertainment and hospitality continue to struggle.”

Hiring labor

The majority of contractors (57 percent) expect to keep the same number of workers in the next six months, a nearly 10 percent increase compared to the second quarter (48 percent).

Furthermore, 32 percent of contractors plan to hire workers, the same figure as quarter two, while just 7 percent expect to reduce staffing, compared to 15 percent in the second quarter.

However, 83 percent of contractors report moderate to high levels of difficulty in finding skilled workers. In turn, 36 percent of contractors say they’ve had to turn down projects due to the struggle to find labor, up from 32 percent in the second quarter.

COVID-19 impact

Eighty-five percent of contractors say they’re experiencing delays due to the coronavirus outbreak, and 83 percent of those contractors expect project delays to continue into the fall. In addition, 71 percent expect delays to continue into early 2021.

However, while coronavirus has undoubtedly impacted the construction industry, delays do seem to be decreasing. In July, contractors reported an average share of 26 percent of projects were delayed, compared to 40 percent in April.

The health and safety of workers also remains important for contractors, as 70 percent say it is a top concern for their business.

With the health and safety of workers in mind, 97 percent of contractors made changes in their COVID-19 response during the third quarter. These changes include providing hand sanitizer and masks (82 percent); changing work flows or procedures for social distancing (75 percent) and allowing remote work for office employees (67 percent).

“The Chamber is working to ensure companies have access to temporary and targeted financial assistance and liability protections so that companies and workers have the confidence to get back to work safely and help the economy on its road to recovery,” says Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce.