Commercial Construction Index reports slow recovery
Worker shortages, materials shortages and rising costs have led to a slowdown in the post-pandemic recovery for construction contractors. The CCI score rose one point this quarter to 66.
Edited by Chris Pasion
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The Q3 2021 U.S. Chamber of Commerce Commercial Construction Index (CCI) shows a slowdown in the post-pandemic recovery as worker shortages, materials shortages and rising costs escalate.
According to the U.S. Chamber of Commerce, the CCI score rose one point this quarter to 66. Two of the three leading indicator scores—confidence in new business opportunities and backlog—improved slightly, while the score for revenue remained unchanged. The overall score, however, is still well below pre-pandemic findings. In Q1 2020, the CCI score was 74.
92% of contractors report some level of difficulty finding skilled workers, but this quarter, 55% indicate high levels of difficulty—a jump of 10% from Q2. The lack of skilled workers has caused 42% of those contractors reporting difficulty finding workers to turn down work, up from 35% in Q2. Also, this quarter, 73% of those contractors who report difficulty finding skilled labor say it’s a challenge to meet project deadline requirements (up from 56% in Q2), and 59% are putting in higher bids for projects (up from 50%).
Contractors are also struggling to find materials to complete their projects. A record 93% of contractors report they are facing at least one material shortage. Also, an all-time high of 98% of contractors say building product cost fluctuations are having an impact on their business, up 35 points year-over-year.
Reversing a year-long trend, the product which most contractors are experiencing a shortage in this quarter is steel (34%), followed closely by lumber at 31%. Since Q3, lumber had been the most often reported shortage. Last quarter, 33% of contractors reported a lumber shortage, 29% reported a steel shortage.
Other key findings of the CCI include declines in equipment spending – 40% of contractors say they will increase spending on tools and equipment over the next six months (down from 44% from Q2)—and diminishing confidence in revenue expectations. According to the CCI, the percentage of contractors who expect their revenue to increase (37%) is down two points from last quarter, while more contractors (10%) expect their revenue to decrease, up from 6% in Q2.
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