Report: Commercial Contractors Optimistic
The first-quarter report from the U.S. Chamber of Commerce Commercial Construction Index has been released, and the data reveals that contractors are growing more optimistic about their outlooks, reportedly driven by a rise in revenue expectations.
Outlooks on hiring and equipment spending plans have also improved while COVID-19 concerns recede.
In general, 36% of contractors expect their revenue to increase over the next year; this is an 11% jump from just last quarter, Q4 2020. Other notable data points include:
In terms of hiring:
“As vaccines continue to roll out, contractors are expecting to hire more workers and anticipating good times ahead. The industry still has a way to go to return to pre-pandemic levels, but rising optimism in the commercial construction industry is a positive sign for the broader economy,” said U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley.
“However, finding skilled workers was a critical issue before the pandemic, and while it has remained a chronic problem over the last year, heightened concern may be emerging again as contractors look to hire. The U.S. Chamber is committed to supporting businesses in retraining and making sure the economy has the skilled workforce it needs.”
As states, the data confirms that concerns around skilled workers and raw materials prices remain. Some of those numbers include:
In terms of materials costs and spending:
Lastly, 58% of contractors say worker health and safety remains the top concern for their business, followed by project delays and shutdowns (50%), fewer projects in general (35%) and building product availability as a whole (33%).
Other Recent Data
While numbers throughout the pandemic have favored commercial and residential construction, the Associated General Contractors of America released data at the beginning of the year in its “2021 Construction Hiring and Business Outlook Report,” which was based on survey results from more than 1,300 firms from all 50 states and the District of Columbia, found that the majority of contractors expect demand for many types of construction to shrink in 2021.
“The percentage of respondents who expect a market segment to contract exceeds the percentage who expect it to expand—known as the net reading—in 13 of the 16 categories of projects included in the survey,” the association said. “Contractors are most pessimistic about the market for retail construction, which has a net reading of -64%. They are similarly concerned about the markets for lodging and private office construction, which both have a net reading of - 58%.”
Some other net readings include:
While the details of the different subsects of commercial projects remains murky, the National Home Builders Association recently dubbed the residential (more specifically home remodeling) market “more than fully recovered” from the pandemic.
More specifically, over the next two years the NAHB predicts that remodeling spending for owner-occupied, single-family homes will increase 4% this year and another 2% next year.
Other professionals again have noted that demand and backlog remain high, and the biggest factors that are prohibiting the sector to grow more are materials prices and labor shortages.