Q4 2021 CCI Report
December 15, 2021
The U.S. Chamber of Commerce Commercial Construction Index (CCI) is a quarterly economic index designed to gauge the outlook for, and resulting confidence in, the commercial construction industry.
Recognizing a need to highlight the important contributions of this sector to the nation’s economy, the U.S. Chamber produced this first-of-its-kind index.
Each quarter, contractors across the country are surveyed in order to better understand their levels of confidence in the industry and top-of-mind concerns.
Index Declines as Revenue Projections Fall on Increasing Labor Costs
The U.S. Chamber of Commerce Commercial Construction Index (CCI) fell this quarter to 65, down one point from 2021 Q3. Two of the three key drivers of the Index—revenue and new business confidence—also fell. One key driver, backlog, improved slightly.
The most notable development in the current quarter is a reduction in revenue expectations, which slipped downward from the previous quarter for the first time since the pandemic began. Not surprisingly, contractors also report continuing concerns about inflation: the cost of skilled labor and the fluctuating costs of materials this quarter remained very high.
Key Drivers of Confidence
Contractors’ confidence in the ability of the market to provide sufficient new business in the next 12 months dropped one point to 63 this quarter. The ratio of average current to ideal backlogs rose by one point to 75, with the average months of backlog decreasing from 9.4 months in 2021 Q3 to 8.4 months. The optimal level of backlog on average decreased as well from 12.7 months to 11.2 months. The third key driver, revenue expectations, dipped three points to 58.
This quarter’s spotlight examines the ongoing consequences of the COVID-19 pandemic on the commercial construction sector. Most contractors (60%) say that less availability of building products/materials is the top consequence of the pandemic. Following behind in second place, a majority (52%) of contractors say that a major consequence of the pandemic is an increase in the ongoing workforce shortage in construction.
Pandemic-related project delays have also increased. Two-thirds (66%) of contractors expect delays on some projects (up from 60% in Q3). Just under a third (29%) expect no delays, and 71% expect delays to continue three months from now. Six months from now, 33% expect no delays and 67% expect delays on some projects (down from 44% in Q3).
Contractors also see growing and intense difficulties finding skilled workers and are paying more to attract them. A majority (62%) of contractors report high difficulty finding skilled workers, up from 55% who said the same last quarter (and up 20 points year-over-year). Over half (56%) of contractors report a high degree of concern about their workers having adequate skill levels, up six points from last quarter and 20 points year-over-year.
Almost all (95%) contractors are experiencing at least one product shortage, up from 93% last quarter and up 24 points (71%) who said the same a year ago. The product which most contractors are experiencing a shortage in is steel (27%), followed by roofing at 19%. Contractors still see growing profits.
Contractors expecting an increase in profit margin over the next 12 months stayed the same (24%) as last quarter, while those expecting profits to remain the same rose three points to 66%. Ten percent expect their profit margin to decrease over that time (down three points from Q3).