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Contractor spending on materials and supplies increases; supply issues continue to grow

The construction industry continues to grapple with supply chain challenges and labor shortages, with the U.S. Fourth Quarter 2021 Commercial Construction Index reporting that nearly all contractors (97%) are concerned about the cost of building materials. Information indicates this number is the highest recorded since the inception of the Commercial Construction Index in 2017.

In the fourth quarter, 97% of contractors said cost volatility had a moderate to high impact on their business, just one point below last quarter’s all-time high and up 23 points year-over-year (74% of contractors reported 2020 No. Moderate to the high impact of cost volatility in Q4).

The data shows that among those surveyed who felt that material cost fluctuations had a considerable impact on their business, 43% cited steel as their top concern, and 31% cited wood/timber as the top product of concern. 19% said roofing materials were their biggest concern regarding price changes.
However, 42% said they would not increase spending on tools and equipment during the same period - a drop from 45% in the third quarter of 2021. 46% of contractors said they would increase spending on tools and equipment in the next six months, up from 40% in the previous quarter.

The Commercial Construction Index shows that nearly all contractors have experienced shortages of at least one construction product or material. "A record-high percentage (95%) of contractors experienced at least one product shortage, up 2 percentage points from 93% in Q3 2021 and 24 percentage points year-over-year."

Figure 1 The American commercial building index on 2021

Figure 1 The American commercial building index on 2021 

In the final quarter of 2021, steel remains the area with the most severe product shortages. Twenty-seven percent of contractors said the steel was their worst material shortage, followed by roofing materials (19 percent) and lumber/timber (17 percent).

Contractors are also concerned about the potential impact of tariffs and the trade war on access to materials. Trade and tariff concerns remained high in the fourth quarter. Forty-seven percent of contractors said steel and aluminum tariffs would have a high to very high impact on their business over the next three years, up to one percentage point from the previous quarter and nearly double the 24 percent a year ago. Nearly half (49%) say new tariffs on construction materials and equipment will have a very high to very high impact on their business over the next three years; this is up 5 percentage points from the previous quarter and up from the fourth quarter of 2020 up 23 percentage points.


Disclaimer: The above views do not represent the position of Jinan LIJIANG Glass, and the copyright belongs to the original author and source. The content of News is the author's personal opinion, and it does not mean that Jinan LIJIANG Glass agrees with his opinion and is responsible for its authenticity. Jinan LIJIANG Glass only provides references and does not constitute investment and application advice.  

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