While a new year is typically marked by renewed optimism, the start of 2022 saw many of the same issues that plagued 2021— from supply chain disruptions and material delays to record inflation. These challenges were reflected in some of the key indicators tracked by Trimble Viewpoint in its latest Quarterly Construction Metrics Index, which provides industry trends pulled from roughly 1,000 Trimble Viewpoint clients during the first quarter of 2022.
While some indicators were down when compared year-over-year, including new projects and contract values — others like hiring and cash flow saw increases, demonstrating that contractors are gearing up to launch new projects, likely in connection with the recently passed $1.2 trillion Bipartisan Infrastructure Law.
Top-line findings of the Q1 2022 Construction Metrics Index are highlighted below, along with analysis of what the stats could mean for the construction industry looking ahead.
New projects increased from Q4 2021 but were down when compared year-over-year:
- New projects increased 10% compared to Q4 2021; however, they were down 20% compared to a year ago (Q1 2021).
- New projects for specialty contractors increased 70% compared to Q4 but were down 12% when compared to Q1 2021.
- General contractors saw a 14% increase in projects compared to Q4, but experienced a 36% decrease when compared to Q1 2021.
- Heavy highways and civil contractors saw a 10% increase in projects compared to Q4, but a 41% decline when compared to Q1 2021.
Analysis: It was heartening to see an increase in projects from quarter to quarter, but it was also clear that ongoing challenges like supply chains, rising material costs, and economic uncertainty are preventing a big return to the new project levels seen a year ago. Seasonally inclement weather could be to blame for some of the Q1 project slowdowns, with upcoming results for Q2 and Q3 perhaps being better indicators for where the project start trend is really headed.
Contract values declined across the board
- Q1 contract values were 17% less than in Q4 2021 and 35% less compared to Q1 2021.
- By vertical, heavy highway and civil contractors experienced a 9% increase in contract values compared to Q4, but a 24% decline compared to Q1 2021.
- Specialty contractors saw a 16% increase compared to Q4, but a 19% decrease when compared to Q1 2021.
- General contractors experienced a 15% decline compared to Q4, and a 9% decline compared to Q1 2021.
Analysis: Contract values have been on the decline for many quarters, which speaks to the fact that contractors are likely hedging their bets in order to reduce their economic uncertainty. This includes taking on smaller projects of lesser value, particularly when real-world construction challenges like rising materials costs and skilled labor shortages remain.
Hiring showed modest gains
- Net hiring increased 16% compared to Q4 and 3% compared to Q1 2021
- Hiring for specialty contractors increased 1.8% compared to Q1 2021
- Heavy highway and civil contractor hiring increased 1.5% when compared to Q1 2021
- Hiring for general contractors increased 0.5% compared to Q1 2021
- Regional hiring increased 1.2% compared to both Q4 and Q1 2021
- Most regions saw modestly positive gains; however, five states accounted for 34% of new hires: California, Texas, Florida, Pennsylvania and North Carolina
Analysis: Even modest hiring gains are worthy of celebration, which can be seen both quarter over quarter and year over year. While contractors may not be jumping feet first into big projects just yet, they appear to be full steam ahead with ramping up their workforces to help them prepare for larger projects down the road.
Cash flow shows the most promise
- Cash flow increased 25% compared to Q4, and increased 28% compared to Q1 2022
- Cash flow for general contractors increased 31% compared to Q4 and 33% compared to Q1 2021
- Cash flow for specialty contractors increased 11% compared to Q4 and 57% compared to Q1 2021
- Cash flow for heavy highway and civil contractors increased 11% compared to Q4 and declined 7% compared to Q1 2021
Analysis: Well before the pandemic, many contractors were squirreling money away into their rainy day funds aimed at weathering potential storms ahead. In some cases, this approach helped contractors successfully pivot and adapt during the pandemic. Now contractors appear ready to start spending again, signaling that confidence is high despite continuing industry challenges.
What’s ahead for the future?
Seeing modest hiring gains and dramatic cash flow increases demonstrates that many contractors are preparing for a ramp up in project starts and contract values. Some of this will likely be brought on by the rollout of the Bipartisan Infrastructure Law, while more could come if economic confidence continues to grow.
