Commercial contractors nationwide appear to feel like the beginning of the end of the pandemic is forthwith, save for one big issue: the availability of materials is getting worse.
A little more than four in 10, 41%, of contractors say less availability of building products and materials is a severe consequence of the pandemic, according to the latest Commercial Construction Index from the U.S. Chamber of Commerce. That’s up more than double from the third quarter, when 15% of respondents reported that was an issue. In addition, 71% of contractors say they face at least one material shortage, up 17 points from 54% in the third quarter.
The most reported material shortage is wood/lumber, the report shows, which has seen higher demand from a boom in residential construction during the pandemic. Nearly one-third, 31%, of commercial construction contractors who responded to the survey report a shortage of lumber — up 20 points from 11% last quarter. Of those contractors experiencing shortages, 89% say it is having a moderate to high level of impact on their business, up from 75% in the previous quarter.
“The pandemic has exacerbated issues contractors were already facing in availability and cost of materials from tariffs and a shortage of skilled workers,” U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley says in the report.
Mary Dougherty, executive director of the Gulf Coast Builders Exchange in the Sarasota-Bradenton market, is hearing the same thing from GCBX members, though maybe not as big a scale as it is nationally. Members are also saying the supply chain of getting materials from factories to jobsites is also slower than normal. “A lot of the contractors are saying if you have a backlog (of work) you are OK,” says Dougherty, and will be able to overcome material slowdown issues that impact specific jobs.
Even with the growing concern over materials shortages, the overall Commercial Construction Index score for the fourth quarter rose slightly to 60, up from 57 in the third quarter. And all three of the index’s main indicators rose: Contractors’ confidence in new business opportunities over the next year inched up one point to 57, revenue expectations increased four points to 52, and backlog rose two points to 70. Of course, the gains are taken in the context of the pandemic: the index remains significantly below the score of 74 from the first quarter of 2020, the last one before the crisis.
“There’s reason for optimism,” adds Bradley. “More than one in three contractors plan to hire more workers in the next six months, and most see sufficient new business in the coming year.”