The Q2 2020 USG Corp. and U.S. Chamber of Commerce Commercial Construction Index released June 23 has revealed a drop in contractors’ confidence and outlook for their industry during the COVID-19 pandemic. However, some index findings indicate that commercial construction is well-positioned for recovery.
The survey results were collected in April, at the height of shutdown restriction, causing the overall Index to plunge from 74 in Q1 to 56 in Q2. According to the Chamber of Commerce, the drop reflects the fact that two of the index’s main indicators — confidence in new business and revenue expectations — both fell 26 points (to 50 and 44, respectively), revealing the severe impact of the coronavirus pandemic on the construction industry.
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). Meanwhile, the percentage expecting to see their revenues decrease in the next 12 months spiked to 2 percent in Q1 to 21 percent in Q2. However, contractors’ view of their backlog of upcoming projects dropped only a modest three points, remaining consistent with the first half of 2018.
“No industry has been immune to the devastating impact of COVID-19,” said Neil Bradley, U.S. Chamber of Commerce executive vice president and chief policy officer. “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.”
Despite COVID-19 shutdowns, 60 percent of contractors report having at least six months of backlog projects (compared to 69 percent in Q1). More than 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 (and in the next two years, that percentage rises to 93 percent).
This quarter’s index also reveals that the commercial construction industry is an important employer during the pandemic 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 workers.
Although construction project delays have had a major impact on the industry, the study reported contractors have become less concerned about delayed projects as they look to the future. In April, over a third (35 percent) of contractors reported that at least 75 percent of their projects were delayed. When asked to look three months ahead, only 16 percent of contractors expected the same. Looking six months ahead, only 8 percent expect at least 75 percent of their projects to be delayed.