Senior Writer and Editor, Strategic Communications
June 16, 2021
The Q2 2021 U.S. Chamber of Commerce Commercial Construction Index (CCI), released today, found that commercial construction contractors are gradually growing more optimistic.
This quarter, the CCI rose three points to 65. The CCI’s three leading indicators—revenue expectations, confidence in new business opportunities, and level of backlog—all improved this quarter reaching scores of 61, 62, and 72, respectively.
However, the overall score (65) is still well below pre-pandemic findings—in Q1 2020 the CCI score was 74, which at the time was in the midrange of scores since the CCI began in 2017.
This quarter’s upbeat sentiments from contractors seem to be mirroring the steady recovery of the overall economy, but the commercial construction industry is also facing some unique—perhaps unprecedented—roadblocks.
A deeper look into this quarter’s data reveals persistent concerns about the availability of skilled workers and shortages of building material.
Contractors struggle to find workers.
In the midst of a deepening workforce crisis, finding skilled labor continues to be a challenge for contractors. This quarter, 88% of contractors report moderate-to-high levels of difficulty finding skilled workers. Of those, nearly half (45%) report a high level of difficulty.
This shortage is leading to real-world setbacks for contractors:
- 68% of contractors say they are asking skilled workers to do more work.
- 56% report a challenge in meeting project schedule requirements.
- Half (50%) of contractors are putting in higher bids.
- Over a third (35%) of contractors report turning down work due to skilled labor shortages.
While finding skilled workers has been a challenge for contractors in the commercial construction industry since before the pandemic, this quarter it coincides with a worsening labor shortage across many industries.
Other recent data and analysis from the U.S. Chamber found that more than 90 percent of industry association economists say employers in their sectors are struggling to find qualified workers for open jobs.
In industries as diverse as agriculture and construction, healthcare and hospitality, manufacturing and computer software, 76% of the respondents reported that businesses in their industries find it “difficult” (52%) or “very difficult” (24%) to hire workers right now.
When asked how businesses in their industry are doing finding workers now compared to five years ago, the results showed hiring is getting more difficult. An overwhelming 83% of respondents saying it was “harder” or “significantly harder” to hire.
The U.S. Chamber and the U.S. Chamber of Commerce Foundation recently launched America Works, a nationwide initiative mobilizing industry and government to swiftly address America’s deepening worker shortage crisis. Additional research and analysis, and workforce solutions for employers are available at uschamber.com/work.
Lumber shortages spike.
Another ongoing challenge for commercial construction contractors are material shortages. This quarter, almost half (46%) of contractors say less availability of building products has been a top concern lately, up from 33% who said the same last quarter.
Lumber has seen higher demand due to a boom in residential construction since the pandemic began. The shortage has spilled over into commercial construction, and this quarter, the impact of the lumber shortages has continued to worsen.
About one third (33%) of contractors say they are experiencing a shortage in wood/lumber, up from 22% in Q1 2021. This is also up from Q4 2020 when 31% said they were experiencing a lumber shortage. For comparison, just 5% of contractors surveyed reported a lumber shortage in Q3 2020.
Steel and pipe are the next most often reported shortages. Twenty-nine percent report a shortage of steel, up 15 points from 14% in Q1 2021; while 12% report a pipe/PVC shortage.
For more CCI findings from this quarter, methodology, and shareable graphics visit commercialconstructionindex.com.