Inaugural ‘Commercial Construction Index’ highlights healthy sector

Source: Dodge Data & Analytics, New York

Commercial construction is in high demand across the country and contractors are confident in the industry trajectory, according to the quarterly USG + U.S. Chamber of Commerce Commercial Construction Index, which premiered this week and is based on Dodge Data & Analytics research.

Nearly all contractors surveyed expect revenues from commercial and institutional work to grow or remain stable this year compared to 2016, with 40 percent expecting an increase and only 3 percent expecting a decrease in volume. Two-thirds of contractors expect to employ more workers in the next six months, indicating growth in a sector that employs approximately 3 million. But 61 percent of respondents report difficultly finding skilled workers, especially among the concrete, interior finishes/millwork, masonry, electrical and plumbing trades.

The Index becomes a new economic indicator designed to gauge what drives commercial construction and its leaders, including specific issues like backlog of work, new business pipeline, revenue projections, workforce, and access to financing. “This was born out of a need to understand the issues that affect commercial construction. The Index will deliver critical insights into the future health of the industry,” says USG Corp. CEO Jennifer Scanlon. “USG is committed to providing solutions for our customers in order to help the entire industry make strong contributions to the U.S. economy. Through the Index we are able to identify areas of strength and pinpoint areas of improvement where industry leaders must focus.”

“The commercial construction industry is a vital engine for the American economy,” adds U.S. Chamber CEO Tom Donohue. “The projected growth uncovered in this research is good news for employers and workers, but there is reason for concern in the lack of qualified talent available in vital specialties. To get our economy growing to its full potential, we must ensure that we have a workforce that is ready to fill the available jobs.”

The Index factors three leading commercial construction indicators—backlog levels, new business opportunities and revenue forecasts—to generate a composite on a scale of 0-100 that serves as an indicator of health for the contractor segment. The Q2 2017 composite score was 76, representing continued sector health. This composite score is up two points from the Q1 survey, driven primarily by a bump in the ratio between actual and ideal backlog. New business and revenue results also saw slight increases quarter-over-quarter. Index findings are compiled using survey results from contractors within a Dodge Data & Analytics panel of 2,700-plus decision makers across key facets of commercial construction.