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Commercial construction recovery stalls because of labor, material shortages

The U.S. Chamber of Commerce, Washington, says rising costs, skilled labor shortages and lack of materials continue to create challenges for the construction industry. These issues have sent the U.S. Chamber of Commerce Commercial Construction Index down one point the fourth quarter of 2021 to 65. Contractors’ revenue expectations, a driver of the overall index score, fell for the first time since the start of the pandemic to 58, down three points from the third quarter.

“One of the most pressing issues facing our economy today is the worsening worker shortage crisis, and these findings show that the construction sector continues to face this challenge,” says Neil Bradley, executive vice president and chief policy officer for the Chamber.

According to the Chamber, 91 percent of contractors report moderate to high difficulty finding skilled labor, up 3 percentage points from last summer. Additionally, 62 percent of contractors experienced high difficulty finding skilled workers, rising 7 percentage points from Q3 and 20 percentage points from one year ago. About 45 percent of contractors report turning down work because they couldn’t find enough workers.

“It is critical that policymakers invest in programs to upskill and prioritize workers, pass sensible immigration reform and remove tariffs and other trade barriers so that contractors have the workers and materials they need to get the job done,” Bradley says.

In Q4 2021, 95 percent of contractors experienced at least one product shortage, up 2 percentage points from 93 percent in Q3 and 24 percentage points year over year. Steel is the most common material seeing a shortage at 27 percent, followed by roofing material at 19 percent and lumber at 17 percent.

The Chamber says 97 percent of contractors indicate cost fluctuations have a moderate to high impact on their businesses, up 23 percentage points year over year. Of those who say material cost fluctuations have affected their businesses, 43 percent note steel is their top concern.

About 47 percent of contractors say steel and aluminum tariffs will have a high degree of impact on their businesses in the next three years, while 49 percent say the same about new construction material and equipment tariffs, up 5 percentage points from Q3 and 23 percentage points year over year.