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Commercial construction is in high demand across the U.S. and contractors remain optimistic about the health of the sector, according to the Q3 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index.
Nearly all contractors surveyed this summer (95 percent) expect revenues to grow or remain stable over the next 12 months compared to the prior 12 months, nearly the same percentage as in the second-quarter 2017 survey. Most contractors (93 percent) also expect to see profit margins stay the same or increase in the next 12 months, reflecting healthy contractor sentiment.
Despite contractors’ expectations for growth, access to talent continues to pose challenges in the third quarter of 2017, with 60 percent of contractors having difficulty finding skilled workers, compared to 61 percent in quarter two. Nearly all contractors (91 percent) said they are at least moderately concerned about the skill level of the workforce, with 66 percent of contractors in the South expressing concerns about the availability of skilled labor.
The Index looks at the results of three leading indicators to gauge confidence in the commercial construction industry—backlog levels, new business opportunities and revenue forecasts—generating a composite index on a scale of 0 to 100 that serves as an indicator of health for the contractor segment on a quarterly basis. The Q3 2017 composite index score was 73, down slightly from the second quarter’s 76, but close to the first quarter’s 74, representing a consistent sentiment of health in the sector.
The third-quarter results from the three key drivers were:
Backlog: On average, contractors currently hold 9.5 months of backlog, close to their average ideal amount of 12 months, indicating a steady market and healthy amount of booked work. This represents 77 percent of their ideal backlog levels.
New Business: More than half of contractors (54 percent) reported high confidence in new business over the next 12 months (compared to 59 percent in Q2).
Revenues: The majority of contractors (67 percent) continue to expect revenues to grow or remain stable in the next year, although expectations for the rate of expected growth inched toward more modest levels (compared to 71 percent in Q2).
