New Commercial Construction Index Marks Growth


Commercial construction is in high demand across the country and contractors are confident in the trajectory of the industry, according to the USG + U.S. Chamber of Commerce Commercial Construction Index. Nearly all contractors surveyed – 96 percent – expect revenues to grow or remain stable this year compared to 2016, with 40 percent expecting an increase and only 3 percent expecting a decrease in revenue.

The Index is a new quarterly economic indicator designed to gauge what drives the commercial construction industry and its leaders, including specific issues like backlog of work, new business pipeline, revenue projections, workforce issues and access to financing. 

Given the sector’s importance to the U.S. economy and the outsized role it could play in years to come, the data contained in the Index will be vital to better understanding trends, challenges and opportunities. The research was developed with Dodge Data & Analytics (DD&A), the leading provider of insights and data for the construction industry, by surveying commercial and institutional contractors.

“This first-of-its-kind 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. “USG is committed to providing solutions for our customers in order to help the entire industry make strong contributions to the U.S. economy. Through the Index we are able to identify areas of strength and pinpoint areas of improvement where industry leaders must focus.”

Two-thirds (66 percent) of contractors said they expect to employ more workers in the next six months, indicating growth in a sector that employs approximately 3 million Americans. But 61 percent of respondents reported difficultly finding skilled workers. The contractors reported the biggest shortages in the concrete, interior finishes/millwork, masonry, electrical and plumbing trades.

“The commercial construction industry is a vital engine for the American economy,” said Tom Donohue, president and CEO of the U.S. Chamber. “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. To get our economy growing to its full potential, we must ensure that we have a workforce that is ready to fill the available jobs. Each quarter, this first-of-its-kind research will make us smarter about future challenges and inform solutions for our country’s leaders.”

The composite scores from the three drivers of confidence were:

  • Backlog: 81, up four points in Q2 over Q1. Contractors’ current average backlog levels represent 81 percent of their ideal backlog levels, up from 77 percent in Q1. On average, contractors currently hold 9.9 months of backlog, while the ideal amount is 12 months.
  • New Business: 77, up two points in Q2. Nearly all contractors continue to report high or moderate confidence in the market. Well over half of contractors (59 percent) reported high confidence in new business over the next 12 months (up from 51 percent in Q1), indicating a shift to higher levels of confidence among some respondents.
  • Revenues: 71, up two points in Q2. An overwhelming 96 percent of contractors expect revenues to grow or remain stable in 2017 over 2016. Of those expecting revenue increases, the actual percentage of expected increases varies widely. Forty percent expect revenue increases of 7 percent or more in the next 12 months.