While optimism continues, the quarter-over-quarter metrics in Trimble Viewpoint’s Q1 2022 Construction Metrics Index indicate that many questions remain about the ongoing challenges within the construction industry.
On the positive side, hiring was up across the industry. Considering the ongoing labor issues within the industry, the increase in hiring is considered a good sign. Cash flow also increased substantially, demonstrating that contractors are likely gearing up to launch new projects, many of which are coming online as part of the $1 trillion-plus infrastructure law.
New projects increased quarter-over-quarter (Q1 2022 v. Q4 2021); however, they are still down year-over-year. Specialty contractors were faring the best in this metric, and heavy highway and civil contractors saw the largest decline overall. Also, contract values were down across all sectors compared to both Q4 and last year.
It appears the construction industry continues to weather the pandemic, supply chain issues and ongoing labor and efficiency issues.
Trimble Viewpoint’s Construction Metrics Index is produced quarterly and designed to provide industry leaders with early insights into the construction business landscape so that they can assess how their own companies are tracking against industry averages.
It examines aggregated and anonymized data from more than 1,000 Viewpoint construction technology users. The quarterly report uses real-time Trimble Viewpoint customer data during the first quarter of 2022, to highlight project statistics, contract values, hiring metrics, and cash flows trends.
From a general contractor perspective, here's a look at the Trimble Viewpoint Quarterly Construction Index metrics by the numbers.Trimble Viewpoint
Below is a summary of the key metrics in the index and what they could potentially mean for construction business activity going forward.
New Projects
The increase in new projects from quarter to quarter offers some optimism for the future. Unfortunately, the continued challenges of increasing material costs, supply chains and economic uncertainty ahead are preventing a return to the new project levels seen a year ago.
Per the index, new projects increased 10% compared to Q4 2021. However, they were down 20% compared to a year ago (Q1 2021)
By sector indicators showed:
- 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 highway and civil contractors saw a 10% increase in projects compared to Q4, but a 41% decline when compared to Q1 2021
Contract Values
The continued decline of contract values mirrors what has occurred in recent quarters and seems to speak to contractors hedging their bets a bit. Many are taking on smaller projects of lesser value to reduce their risk exposure while economic uncertainty is in the air and real-world construction challenges like rising materials costs and skilled labor shortages remain. According to Trimble Viewpoint, across the industry, Q1 contract values were 17% less than in Q4 2021 and 35% less compared to Q1 2021.
By sector:
- 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
Labor Trends
While contractors are hesitant to jump feet first into multiple big projects (often opting instead for smaller slices of new work or tackling existing backlogs), they appear to be full steam ahead with ramping up their workforces. This makes sense as it allows time for contractors to ramp up their teams and prepare for the larger projects a little further down the line. The index shows that net hiring increased 16% compared to Q4 and 3% compared to Q1 2021. Similarly, regional hiring increased 1.15% compared to both Q4 and Q1 2021. Most regions saw modestly positive gains; however, five states accounted for 34% of new hires, including California, Texas, Florida, Pennsylvania and North Carolina.
By sector:
- 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
- General contractors hiring increased 0.5% compared to Q1 2021
Cash Flow Trends
The increase in cash flow is a strong positive indicator that contractors appear ready to start spending again. Trimble Viewpoint’s index shows that cash flow increased 25% compared to Q4 and increased 28% compared to Q1 2022. The double-digit cash flow increases in Q1 signal that confidence is high, despite industry challenges and economic uncertainty remaining. It appears contractors are ready for the big projects that are on the horizon.
By sector:
- 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.
