The Trimble Viewpoint Q2 2021 Metrics Index Report shows contractors continued to feel the impacts of the lingering COVID-19 pandemic in the second quarter of the year. With the rate of infections rising again at the time the report was written, contractors saw ongoing struggles in scaling their operations in the face of unpredictable conditions.
The Quarterly Metrics Index from Trimble Viewpoint uses real-time, anonymized data from more than 1,000 anonymized Viewpoint customers. The Q2 2021 report analyzed data collected from April through June 2021 and compared to the same period in 2020.
According to the latest report, construction activity saw a positive rebound year over year. Data showed:
- Backlogs were up 7% compared to Q2 of 2020, demonstrating that projects continued to rebound.
- Roughly 27,500 projects were pending in Q2 2021 vs. 25,700 in Q2 2020
- The Architecture Billings Index (ABI) came in at 58.5 in May, one of the highest scores ever recorded.
The benefits of this rebound were uneven, however, with only specialty and heavy highway and civil contractors seeing gains. This was attributed to investment in existing structures remaining high in light of favorable finance rates.
- Specialty contractors saw a 20% increase in backlogs in Q2, largely due to big project increases in April (45%) and May (50%).
- Heavy highway and civil contractors experienced 20% more projects each month in Q2 than Q2 2020.
General contractors, on the other hand, saw a 12% decrease in projects in Q2 vs. a year ago on weaker nonresidential activity due to the surplus of office space and a decline in brick-and-mortal retail starts.
Contract Values
Though project numbers were up in Q2 2021, contract values were down considerably (-12%) compared to Q2 2020, an indication of continued uncertainty in the marketplace. The report cites a reduction in high-value commercial and industrial building contracts as having the biggest overall impact on contract values across the industry.
- General contractors reported a 35% decline in Q2 2021 compared to Q2 2020.
- Heavy highway and civil contractors experienced a 50% decline.
On the upside, contract values were up 20% for the quarter from Q1 2021, with the largest increase reported in May.
Hiring Trends
Hiring saw major gains in Q2, increasing roughly 23% year over year, though comparisons are difficult given the rapid declines and rebounds in construction jobs in 2020. Pandemic influences are largely responsible for the 100% in hiring seen in April year over year. This gain was followed by a far more typical increase of 10% in June.
- Specialty contractors saw the highest overall hiring growth of 9.7% compared to Q2 2020, and June was the segment’s highest month of growth.
- Hiring for general contractors was up 1.45% vs. a year ago, with continuous growth each month and the highest growth seen in June.
- In contrast, hiring for heavy highway and civil contractors declined 33% compared to Q2 2020.
Overall, construction companies posted an increase of 11,000 jobs in July 2021, and the sector was up 21,000 jobs in the first half of 2021 compared to the same period in 2020. However, the report suggests “reason to be bearish” for hiring in the second half of the year.
“The ongoing impact of the pandemic and lower contract value project starts, plus the large surplus of unfilled positions that is common to most industries, paints a dim picture for contractors looking to recruit skilled labor in the second half of the year,” the report indicates.
Cash Flow
Many contractors held onto cash in 2020 due to the uncertain business environment, and this trend has continued, though to a lesser degree, in 2021. According to the Q2 2021 report, approximately 45% to 50% more cash was spent during the quarter compared to the same time last year, a positive sign that confidence is beginning to rise and new projects are starting.
By vertical, heavy highway and civil contractors spent 51% more cash in Q2 2021 compared to the previous year, specialty contractors spent 43% more and general contractors spent 16% more, respectively.
The full report can be accessed at https://www.viewpoint.com/blog/q2-2021-quarterly-construction-metrics-index.
Information provided by Trimble Viewpoint and edited by Becky Schultz.
