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 at the height of shutdown restrictions. The overall Index drop stems 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 versus 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 commercial construction 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. The Q2 CCI also reveals that the industry is an important employer and ready to hire more workers. One in three contractors (32 percent) plan to add payroll 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.
Index researchers found that contractors quickly adapted their operations to comply with new safety guidelines driven by pandemic response measures. More than nine in 10 contractors (92 percent) said they changed work procedures to increase social distancing. Given a list to choose from of the most severe Covid-19 consequences for their business, three-quarters (75 percent) said worker health and safety is a top concern, followed by fewer projects (48 percent), and increases in workforce shortages (33 percent). Asked how the pandemic will affect how they do business in the future, contractors said adjustments to safety and work procedures would be the top change. They also expect more remote work for staff and paying greater attention to contract language.
“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 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.”