Rising Revenue Lift Contractors’ Outlooks

Credit: LBM Journal

Data from the first quarter U.S. Chamber of Commerce Commercial Construction Index reveals contractors are growing more optimistic, mostly driven by a rise in revenue expectations. They also have better outlooks on hiring and equipment spending plans as business concerns related to the coronavirus pandemic lessen.

In the first quarter of this year, 36 percent of contractors expect their revenue to increase over the next year, a jump of 11 percentage points from 25 percent in Q4 2020. Eighty-seven percent expect their revenue to either stay the same or increase, up from 86 percent last quarter. Most (86 percent) contractors also report a moderate to high level of confidence that the U.S. market will provide enough new business in the next year. Nearly a quarter (24 percent) report a high level of confidence, up from 19 percent in Q4 2020.

Hiring plans are also positive as close to half (46 percent) of contractors say they will employ more people in the next six months, up from 37 percent in Q4 2020. The same percentage (46 percent) expect to keep the same number of workers, and just 3 percent expect to reduce their staffing, down from 12 percent in Q4 2020.

The boost in revenue expectations drove a three-point rise in this quarter’s overall Index score to 62 from 59 in Q4 2020. The score for revenue expectations, one the Index’s three leading indicators, jumped five points to 57, while contractors’ confidence in new business opportunities rose two points to 59. Despite the gains, the Index remains 12 points below its score of 74 from Q1 2020 before the pandemic.

The Q1 2021 results from the three key drivers are:

  • Revenue: Contractors’ revenue expectations over the next 12 months increased to 57 (up five points from Q4 2020).
  • New Business Confidence: The overall level of contractor confidence increased to 59 (up two points from Q4 2020).
  • Backlog: This indicator remained steady from Q4 2020 at 69. (Source)

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