Contractor survey: Labor, material challenges constrain recovery

In the face of worker and materials shortages, plus rising costs, commercial construction contractors cite a slowdown in the pace of their recovery from the pandemic, according to U.S. Chamber of Commerce Commercial Construction Index third quarter data. The Index presents results from a Dodge Data & Analytics survey of contractors performing nonresidential building work. 

More than 90 percent of respondents report some level of difficulty finding skilled workers, but in the third quarter, 55 percent indicate high levels of difficulty—a jump of 10 percentage points from Q2. The lack of workers has caused 42 percent of those contractors reporting difficulty finding workers to turn down projects, up from 35 percent in Q2. Also, a record 93 percent of contractors report they are facing at least one material shortage. Prices are likewise a concern: An all-time high of 98 percent of Index survey respondents say building product cost fluctuations are having an impact on their business, up 35 points year over year.

Contractors are facing concerns about supply chains, worker safety, and talent shortages as they look to recover from the pandemic. Less availability of building products/materials is, by far, their top concern (62 percent) related to the Covid-19 pandemic, followed by worker health and safety (38 percent), and an increase in worker shortages (37 percent).

“Index findings demonstrate the fragility of our economy’s recovery from the Covid-19 pandemic. And unfortunately, these trends are not limited to the commercial construction industry,” says U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley. “Across all sectors of the economy, businesses are facing tremendous difficulties finding skilled labor. Supply chain shortages and rising inflationary pressures are threatening to stop our economic resurgence in its tracks. We need to address our worker shortages, including by doubling legal immigration, and address supply chain issues, including through tariff reductions.”

Contractor concerns are reflected in the Index score, which from Q2 rose just one point to 66 and comprises figures from three key drivers: Revenue, contractor expectations for which over the next 12 months hold steady at 61; New business confidence, the overall level of which increased to 64 (up two points from Q2 2021); and, Backlog, up three points from Q2 and indicated as the ratio of average current to ideal backlog. However, contractors surveyed for the Index see improvements over the longer term: 90 percent report a moderate to high level of confidence in the market’s ability to provide new business over the next year, up one point from Q2. Project delays due to the pandemic also continue to improve: 60 percent of survey respondents are experiencing delays (down from 72 percent in Q2), with an average share of 15 percent of projects delayed (down from 17 percent in Q2).