The COVID-19 pandemic and subsequent shutdowns dealt a major blow to contractor confidence in the second quarter of this year. After little changed in Q3 2020, the Commercial Construction Index (CCI), released quarterly by the U.S. Chamber of Commerce and Dodge Data & Analytics, showed improvement in Q4 2020 despite remaining significantly below pre-pandemic levels.
The contractor confidence score rose three points from the Q3 2020 CCI to 60. The Q1 CCI was 74, which, at the time, was in the midrange of scores over the last three years. All three key drivers behind the score nudged upward this quarter, an improvement from the last CCI report.
Contractors’ confidence in the ability of the market to provide new business in the next year increased one point to a score of 57. This indicator is up seven points from its Q2 2020 level, but is still far below its Q1 2020 score of 76.
Most contractors (85%) say they have moderate to high confidence that the U.S. market will provide sufficient new business opportunities in the next 12 months. When it comes to the next 24 months contractors are slightly more optimistic, with 86% reporting moderate to high confidence in new business. That’s at the same level as Q3.
Revenue expectations for the next 12 months rose four points in Q4 to a score of 52. This indicator was 70 in Q1 2020. The gap between contractors expecting a revenue increase or decrease over the next year grew wider this quarter. A quarter of contractors expect their revenue to increase, up from 22% last quarter, while 14% expect their revenue to decrease, down from 19% in Q3 2020. However, the majority (61%) of contractors expert their revenue to remain about the same over the next 12 months.
Backlog is up two points this quarter for a score of 70. That’s an improvement from the Q3 CCI report, which showed a drop of five points. This key driver is the closest of the three to its pre-pandemic levels. Its score in Q1 2020 was 76.
The average months of backlog increased slightly this quarter from 8.3 months to 8.4 months. The reported optimal backlog level, on average, was unchanged at 12.2 months.
The percentage of contractors reporting a decrease in backlog dropped ten percentage points compared to the Q3 2020 CCI report. The number of contractors who said their backlog stayed the same was up five percentage points while those reporting an increase rose three points.
The data in the report is from a Q4 2020 survey conducted online from October 1-6, 2020 and November 10-15, 2020. Fifty-six percent of respondents are prime contractors and 44% are specialty trade contractors.