As those in the construction industry continue to manage supply chain challenges and labor shortages, the Q4 2021 Commercial Construction Index (CCI), released quarterly by the U.S. Chamber of Commerce and Dodge Data & Analytics, reports nearly all contractors (97%) are concerned about the cost of building materials. The information states that this number is the highest recorded since the CCI’s inception in 2017.
In Q4, 97% of contractors indicated cost fluctuations have a moderate-to-high impact on their business, which is just one point below the all-time high last
quarter and up 23 points year-over-year (74% reported moderate-to-high impacts from cost fluctuations in 2020 Q4).
According to the data, of those who said material cost fluctuations have had a considerable impact on their business, 43% say steel was their top concern, followed by 31% who say wood/lumber is the product of most concern. In third place, 19% said roofing materials were their biggest concern in terms of price changes.
Forty-six percent of contractors report they will spend more on tools and equipment in the next six months, up from 40% last quarter. However, 42% say they will not spend more on tools and equipment over the same period—this is down from 45% who said the same in 2021 Q3.
The CCI shows almost all contractors are experiencing at least one building product or material shortage. “In fact, a record-high percentage (95%) of contractors are experiencing at least one product shortage, up two points from 93% in 2021 Q3, and up 24 points year-over-year.”
In the last quarter of 2021, steel remained the most-reported product shortage. Twenty-seven percent of contractors said steel as their top materials shortage, followed by roofing material (19%) and wood/lumber (17%).
Contractors are also concerned about the potential effect of tariffs and trade wars on access to materials.
“It is interesting to note the concerns over steel tariffs in particular since this is contractors’ top materials shortage worry. This suggests that easing steel tariffs could significantly reduce contractors’ concerns about ongoing steel shortages,” according to the data.
Concerns over trade and tariffs remained high in Q4. Forty-seven percent of contractors say steel and aluminum tariffs will have a high to a very-high degree of impact on their business in the next three years, which is up one point from last quarter and almost double from 24% a year ago. Nearly half (49%) say new construction material and equipment tariffs will have a high to a very-high degree of impact on their business over the next three years; this is up five points from last quarter and up 23 points from 2020 Q4.