Revenue increase for contractors expected as COVID restrictions decreaseJune 7, 2021
As the country continues to re-open and COVID-19 restrictions are lifted, many industries are finding themselves returning to a sense of normalcy. Construction is among the industries looking forward to a surge in business.
The construction industry was hit hard during the pandemic, as many projects were entirely shut down in spring 2020 and then were slow to restart later in the year. However, as vaccines have become more readily available and many states have moved toward lifting most, if not all, restrictions, construction is rebounding.
Construction revenues increase, raising contractors’ confidence
As reported in the U.S. Chamber of Commerce Commercial Construction Index (CCI) for Q1 2021, contractors’ revenue expectations jumped five points compared to Q4 2020, though this number remains below the pre-pandemic score of 70. Similarly, contractors’ confidence in new business grew, up two points compared to Q4 2020, with many more reporting a high level of confidence compared to prior quarters.
“Despite ongoing uncertainty over the impact of the pandemic on commercial construction projects, both revenue and hiring expectations are up slightly this quarter,” states the CCI. “This may indicate contractors are anticipating a return to more normal economic conditions in the sector later this year.”
Construction managers seeking qualified workers face shortages
Contractors also expect to increase the number of staff they employ, with 46% planning to hire more workers over the next six months. While this is positive news for the industry, it creates a challenge for contractors as they see work volume increasing but have concerns over finding skilled staff.
According to the CCI, 85% of contractors report moderate to high levels of difficulty in finding skilled workers, with 88% reporting a moderate to high degree of concern about workers having an adequate skill set.
Pandemic-related material shortages impact industry rebound
Additionally, many contractors are facing material shortages, on top of workforce shortages.
“Currently, 71% [of contractors] say they are experiencing at least one building material shortage, statistically unchanged from Q4 2020, showing shortages have persisted for a second quarter in a row,”
states the CCI.
Product shortages mean higher prices, which ultimately impacts contractors’ bottom lines.
Expected revenue increases mean steady profits despite challenges
Despite potential material and worker shortages, says the CCI, contractors’ profit margin expectations for the next 12 months have remained steady for the last three quarters, with 68% of contractors expecting their profit margins to remain the same.
Overall, new business and revenue expectations are looking up for the construction industry, and these findings in the CCI align with the state of the nation--as more people are vaccinated and COVID cases decrease, more industries can return to where they were before the pandemic.
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