Washington, D.C. -- The Q1 2018 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index (Index), recently revealed nearly two-thirds of contractors are highly confident that demand for commercial construction will increase over the next year. However, continued concerns around labor shortages have put even greater pressure on the industry. To increase jobsite efficiency and improve labor productivity, increasingly more builders are turning to alternative construction solutions, like prefabrication and modularization.

The Q1 Index indicates contractors turn to innovations such as prefabricated and modular building materials to create more efficient jobsites (89%), increase labor productivity (85%), drive cost savings (58%), and provide a competitive advantage in the marketplace (51%). In fact, 50% of contractors report their companies already use prefabricated and modular components and the number was even higher among general contractors (72%). Nearly two-thirds (63%) of contractors report at least moderate demand for these building materials.

"Access to skilled labor is a continued concern, which has led contractors to increasingly seek solutions that help offset jobsite challenges," said Jennifer Scanlon, president and chief executive officer of USG Corp. "There is significant opportunity to introduce innovations that confront jobsite efficiency and strengthen the industry – such as solutions that enable prefabricated and modular building components."

Contractors in the Northeast (69%) reported the most frequent usage of prefabricated and modular components, compared to the South where only 24% indicate their companies are using these materials. Firms in the Northeast also expect to hire fewer workers—38% of contractors in the region expect to employ more staff in the next six months, compared with 57% in the South, 59% in the West, and 68% in the Midwest. Across all regions, concern over the cost of hiring skilled labor has remained consistent over the past year—nearly two-thirds (64%) of contractors expect these costs to increase in the next six months.

Despite labor concerns, contractor sentiment remained steady for the first quarter, as a result of strong revenue expectations and higher profit margins, with a composite score of 74. "As we work to continually build our neighborhoods, towns, regions, and roads, as well as the workforce that supports our growth, innovation becomes a key component in advancing our country into the 21st century," said Thomas J. Donohue, president and CEO of the U.S. Chamber. "We must invest in a skilled, competitive, motivated workforce and embrace new innovations to ensure we are able to compete on a global scale."

The Index looks at the results of three leading indicators to gauge confidence in the commercial construction industry – backlog levels, new business opportunities and revenue forecasts – generating a composite index on a scale of 0 to 100 that serves as an indicator of health for the contractor segment on a quarterly basis. The Q1 2018 composite score was 74, holding steady from Q4 2017.

For more information, visit www.uschamber.com or www.usg.com.