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Commercial Construction Contractors Struggle to Find Workers, Materials As Recovery Stalls

In the face of escalating challenges including worker shortages, materials shortages, and rising costs, commercial construction contractors are seeing a slowdown in the pace of their recovery from the pandemic, according to third quarter data from the U.S. Chamber of Commerce Commercial Construction Index.


Almost all (92%) contractors report some level of difficulty finding skilled workers, but this quarter, 55% indicate high levels of difficulty—a jump of 10 percentage points from the second quarter. The lack of workers has caused 42% of those contractors reporting difficulty finding workers to turn down work, up from 35% in the second quarter.


Also, a record 93% of contractors report they are facing at least one material shortage. Prices are also a worry: An all-time high of 98% of contractors 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. Contractors say that less availability of building products/materials is, by far, their top concern (62%) related to the COVID-19 pandemic, followed by worker health and safety concerns (38%), and an increase in worker shortages (37%).


Contractors’ concerns are reflected in the index score, which rose just one point this quarter to 66. Two of the three leading indicator scores—confidence in new business opportunities and backlog—improved slightly, while the score for revenue remained unchanged.


However, contractors see improvements over the longer term. Ninety percent of contractors 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 the second quarter. Project delays due to the pandemic also continue to improve: 60% are experiencing delays (down from 72% in the second quarter), with an average share of 15% of projects delayed (down from 17% in the second quarter).

Here are more findings:


Steel replaces lumber as most-reported shortage. Reversing a year-long trend, the product which most contractors are experiencing a shortage in is steel (34%), followed closely by wood/lumber at 31%. Since the third quarter, lumber had been the most often reported shortage. Last quarter, 33% of contractors reported a lumber shortage, 29% reported a steel shortage.


Steel tariff concerns grow. As steel shortages worsen, 46% of contractors say steel and aluminum tariffs will have a high to very-high degree of impact on their business in the next three years, up 11 points from 35% in the first quarter of 2021.


Worker shortages are impacting business. This quarter, 73% of those contractors who report difficulty finding skilled labor say it’s a challenge to meet project deadline requirements (up from 56% in the second quarter), and 59% are putting in higher bids for projects (up from 50%).


Equipment spending declines. More contractors report pulling back their purchasing plans this quarter: 40% say they will increase spending on tools and equipment over the next six months (down from 44% who said they would increase spending in the second quarter).


Contractors are less confident in their revenue expectations.
The percentage of contractors who expect their revenue to increase (37%) is down two points from last quarter, while more contractors (10%) expect their revenue to decrease, up from 6% in the second quarter.


Visit www.CommercialConstruction to access the full report, methodology and shareable graphics.

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