New Chamber of Commerce Index Shows Healthy Commercial Construction Sector

96% of executives surveyed in the sector expect steady or growing revenue in 2017.

Contractors are confident about the course of the commercial construction sector, according to the commercial construction index, a new economic indicator from the US Chamber of Commerce and USG Corporation. For the second quarter, the index was up to 76, from 74 (on a scale of 100) for the first quarter.

Almost all of the contractors surveyed, at 96%, expect their revenues will rise this year or stay steady, compared to 2016 levels, with 40% looking for revenues to rise. The index includes input on aspects such as work backlogs, pipeline of new business, projections for revenue, workforce issues, and availability of financing, to get a reading on the sector.

Input for the index is compiled from a quarterly survey by Dodge Data & Analytics of more than 2,700 executives in the commercial construction sector. 

“The commercial construction industry is a vital engine for the American economy,” said Tom Donohue, president and CEO of the US Chamber of Commerce. “The projected growth uncovered in this research is good news for employers and workers, but there is reason for concern in the lack of qualified talent available in vital specialties. Each quarter, this first-of-its-kind research will make us smarter about future challenges and inform solutions for our country’s leaders.”

While 66% of the contractors anticipate employing more workers in the next six months, 61% of the respondents reported difficulties in finding skilled workers, particularly related to tradespeople who work with concrete, interior finishing and millwork, masonry, plumbing, and electricals.

The commercial construction index uses input from three leading indicators – business backlogs, new business opportunities, and forecasts of revenue – to develop an index reading that provides a quarterly take on the health of the sector. For the second quarter, contractors reported a backlog reading of 81, or 81% of their desired backlog levels, up from 77 for the first quarter. This represents 9.9 months of backlog, compared to the ideal 12 months of backlog. And 59% reported high levels of confidence in new business opportunities over the next 12 months, compared to 51% in the first quarter. This brought the new business component of the index up to 77, from 75 in the first quarter. The revenue component also rose to 71, from 69 in the first quarter.

“[The index] was born out of a need to understand the issues that affect commercial construction. The index will deliver critical insights into the future health of the industry,” said Jennifer Scanlon, president and chief executive officer of USG Corp. 


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