Commercial Construction Index released for first-quarter of 2019

The Commercial Construction Index for the first-quarter of 2019 was released by Dodge Data & Analytics. Results from the Q1 2019 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index indicate that the labor shortage continues to pose major challenges to the construction industry, causing firms to ask skilled workers to do more work (81 percent), struggle to meet deadlines (70 percent), increase costs for new work (63 percent) and reject new projects (40 percent).

As the industry continues to look for ways to solve the labor shortage, the latest survey suggests a contributing factor could be the negative perceptions surrounding construction careers. Mending younger workers’ unfavorable perception of construction careers could provide an opportunity to revitalize the workforce. When asked about the biggest myths about working in the commercial building industry, contractors cited the perception that construction jobs are all “dirty” jobs (61 percent), construction work requires only brute strength (55 percent) and construction is just a “job” rather than a career (52 percent). Yet, contractors note good pay, opportunities for advancement and the ability to learn new skills on the job as the best reasons to pursue a career in construction.

Contractors agree that the best way to increase the skilled workforce in U.S. construction is to increase enrollment in technical schools and vocational training. A better reputation for compensation, apprenticeship programs and opportunities for advancement were also cited as ways to recruit more workers — particularly those under the age of 30 — into commercial construction. To retain employees, 55 percent of contractors believe there should be more opportunities for advancement, in addition to increased employee engagement and more on-the-job training. The growing role of technology on the job site was also cited as a means to attract the next generation of workers to the construction workforce.

Overall, the first-quarter composite score of 72 shows a healthy market though contractors may be slightly more cautious about the health of the commercial construction industry, evidenced by a drop in the three leading indicators — backlog, new business and revenue forecasts. The survey was fielded in January during the federal government shutdown, so concerns about economic stability and future growth were likely more top-of-mind than in previous surveys. However, the data about industry perceptions should still be troubling to anyone looking to solve the prevailing labor shortage.

Backlog: The ratio between the average actual (9.7 months) and stated ideal (12.5 months) backlog is still strong at 77, even with the three-point drop from Q4 2018.

New Business: Contractors are more cautious about the market’s ability to provide new business opportunities in the next 12 months than at any time in the last two years.

Revenue: Most contractors believe they will see revenue growth in the next 12 months, but the percentage is lower than in any quarter in 2018.

The Commercial Construction Index is a quarterly economic indicator designed to gauge what drives the commercial construction industry and its leaders, based on research conducted with contractors. Topics covered include the three factors from which the index is derived — backlog levels, new business opportunities and revenue forecasts — and additional market drivers such as workforce, financing, and materials and equipment trends. The index also features a quarterly spotlight on revolving construction industry topics.