The USG and U.S. Chamber of Commerce Commercial Construction Index, a gauge for the outlook and confidence in the commercial construction industry, dropped massively from 74 in Q1 to 56 in Q2. The reason for the dive is that two of the index’s three main indicators—confidence in new business and revenue expectations—both fell 26 points, to 50 and 44, respectively. The third indicator, backlog, dropped 3 points, to 73.
The report says that this is driven by the fact that, of all respondents to the survey, only 16% of contractors had “high confidence” in new business opportunities within the next 12 months, compared with 54% in Q1.
“Even as most construction has been deemed essential during the last few months, the loss of new projects and revenue has been severe. This industry is key to our economy, representing 3 million American jobs and $700 billion in spending," said Christopher Griffin, president and CEO of USG Corp. “We’re watching closely signs of improvement, as commercial construction can serve as a bellwether for other economic development and recovery.”
One glimmer of good news is that this report doesn’t appear to indicate a drop in construction jobs. Of the contractors surveyed, nearly a third said they plan to hire more workers in the next six months, 48% said they plan to be about the same, and only 15% said they planned to cut any jobs.
“No industry has been immune to the devastating impact of COVID-19,” said Neil Bradley, U.S. Chamber of Commerce executive vice president and chief policy officer. “However, the commercial construction industry appears poised for a quick recovery and a return to growth. This is good news for the economy and the millions of Americans who work in the industry.”