According to a report from the U.S. Chamber of Commerce, commercial contractors are becoming more optimistic about the future. The report, “U.S. Chamber of Commerce Commercial Construction Index—Q1 2021,” noted that contractor optimism is being driven primarily by a rise in revenue expectations.
“They also have better outlooks on hiring and equipment spending plans as business concerns related to the coronavirus pandemic lessen,” the report stated.
In the first quarter of 2021, 36% of contractors reported that they expected their revenues to increase over the next year, up from 25% in Q4 of 2020. Most contractors (86%) also reported a moderate to high level of confidence that the U.S. market will provide enough new business in the next year. Almost a quarter of those (24%) reported that their level of confidence was high, up from 19% in Q4 of 2020.
The expected increase in revenue drove this quarter’s overall index score to 62, up from 59 in Q4 of 2020.
“The score of revenue expectations, one of the index’s three leading indicators, jumped five points to 57, while contractors’ confidence in new business opportunities rose two points to 59,” according to the report. Despite these gains, the index remains 12 points below its score of 74 from Q1 of 2020, which was just before the pandemic.
Hiring plans are also positive, as 46% of contractors said they will employ more people in the next six months, up from 37% in Q4 of 2020. In addition, 46% expect to keep the same number of employees, and only 3% expect to reduce staffing, which is down from 12% in Q4 of 2020.
“The industry still has a way to go to return to pre-pandemic levels, but rising optimism in the commercial construction industry is a positive sign for the broader economy,” said Neil Bradley, executive vice president, chief policy officer and head of strategic advocacy for the U.S. Chamber of Commerce.
Despite increasing optimism, contractors continue to have a number of concerns, according to the report, including challenges related to finding enough skilled workers, increasing lumber and other building supply prices, decreasing lumber and other building supply availability, tariff and trade concerns and continued delays in projects due to health concerns for employees related to the pandemic.