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Construction Survey Sees Confidence Drop

Friday, June 26, 2020

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The second-quarter numbers for the USG Corporation + U.S. Chamber of Commerce Commercial Construction Index, released earlier this week, indicate a plunge from 74 in Q1 to 56.

Officials credit the drop to very few contractors (16%) now express high confidence in the market’s ability to provide new business opportunities in the next 12 months (down from 54% in Q1), and there was a 30-point drop in contractors expecting their revenues to increase (17% in Q2 from 47% in Q1).

Meanwhile, the percentage expecting to see their revenues decrease in the next 12 months spiked from 2% in Q1 to 21% in Q2.

photovs / Getty Images

The second-quarter numbers for the USG Corporation + U.S. Chamber of Commerce Commercial Construction Index, released earlier this week, indicate a plunge from 74 in Q1 to 56.

The Chamber notes that two of the index’s three main indicators fell sharply: confidence in new business and revenue expectations both dropped 26 points.

However, the survey also suggests that the industry is poised for recovery, according to the Chamber. Stats include:

  • 60% of contractors reported they have at least six months of backlog (compared to 69% in Q1);
  • 83% say their revenue will increase or remain about the same in the next year;
  • 75% say they have moderate or high confidence that the next year will bring sufficient new business opportunities;
  • 32% plan to hire more workers in the next six months; and
  • 48% believe their workforce will stay the same.

“Even as most construction has been deemed essential during the last few months, the loss of new projects and revenue has been severe,” said Christopher Griffin, President and CEO of USG Corporation.

“This industry is key to our economy, representing three million American jobs and $700 billion in spending. We’re watching closely signs of improvement, as commercial construction can serve as a bellwether for other economic development and recovery.”

The Chamber noted, however, that these results were largely collected in April, at the height of COVID-19 shutdowns.

Other Surveys

Other, more recent, surveys, back up the upswing projections. Such as the data that the Associated General Contractors of America released last week, which indicated that construction activity has returned to pre-COVID-19 levels in 34 states.

That survey is based on responses from over 630 firms collected between June 9 and 17.

That data found that, in addition to the 34 states, construction has also reached pre-pandemic levels in Dallas and Miami in terms of large metro areas. Meanwhile, the AGC survey found that just 8% of firms were forced to layoff or furlough workers in June while 21% added employees.

AGC added that while 17% anticipating adding workers in the next four weeks, 42% do not expect demand to recover to normal levels for at least a few months and many are still relaying on federal aid.

In addition to the recent AGC numbers, the National Association of Home Builders and Wells Fargo recently released the latest data from their monthly Housing Market Index survey as well.

According to the NAHB, the survey showed that builder confidence in the market for newly built single-family homes jumped 21 points to 58 in June, noting that a reading above 50 indicates a positive market. According to Bloomberg, analysts had anticipated a reading of 46, and this increase is reportedly the biggest on record.

   

Tagged categories: Associated General Contractors (AGC); COVID-19; Department of Commerce; Good Technical Practice; Industry surveys; Market data; NA; National Association of Home Builders (NAHB); North America

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