Source: U.S. Chamber of Commerce, Washington, D.C.
The Q2 2020 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index dropped to 56 from a Q1 level of 74, reflecting lower contractor confidence in three indicators—new business, revenue expectations and project backlog volume—expressed during surveys conducted in April, at the height of shutdown restrictions.
The overall Index drop stemmed in part from the fact that very few contractors (16 percent) express high confidence in the market’s ability to provide new business opportunities in the next 12 months (down from 54 percent in Q1), coupled with a 30 percentage point drop in those expecting revenue increases (17 percent in Q2 from 47 percent in Q1). Meanwhile, the percentage expecting to see their revenues decrease in the next 12 months spiked from 2 percent in Q1 to 21 percent in Q2.
Certain survey findings suggest that the commercial construction industry is poised for recovery, nevertheless: Contractors still have significant backlog, with 60 percent of Q2 survey respondents reporting at least six months of booked activity versus 69 percent in the prior quarter. More than eight in 10 (83 percent) say their revenue will increase or remain about the same in the next year. And, three in four contractors say they have moderate or high confidence that the next year will bring sufficient new business opportunities.
This quarter’s Index also reveals that the commercial construction industry is an important employer and is ready to hire more workers. One in three contractors (32 percent) plan to hire more workers in the next six months, while nearly half (48 percent) believe their workforce will stay the same. Only 15 percent expect to employ fewer people.
“Even as most construction has been deemed essential during the last few months, the loss of new projects and revenue has been severe. This industry is key to our economy, representing three million American jobs and $700 billion in spending,” says USG Corp. CEO Christopher Griffin. “We’re watching closely signs of improvement, as commercial construction can serve as a bellwether for other economic development and recovery.”
“No industry has been immune to the devastating impact of Covid-19,” adds U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley. “However, the commercial construction industry appears poised for a quick recovery and a return to growth. This is good news for the economy and the millions of Americans who work in the industry. Congress can help by continuing to support the economy.”