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Plumbing-heating-cooling contractors are feeling cautiously optimistic, according to a new report from the Plumbing-Heating-Cooling Contractors—National Association (PHCC). The PHCC Business Intelligence Department just released its newly developed Contractor Confidence Index (CCI). Sponsored by PHCC Strategic Partner Bradford White, the PHCC CCI is based on a quarterly survey of PHCC members designed to take the pulse of the plumbing, heating, and cooling market.
The PHCC First Quarter 2023 CCI summary report revealed a CCI of 52.2, meaning contractors believe industry conditions are better than the previous six months, but are trending lower because of ongoing challenges. The first quarter CCI dropped from 56.0 in the Fourth Quarter of 2022, with an increasing number of respondents citing economic uncertainty and fear of a coming recession.
Any rating over 50 indicates a higher share of PHCC contractors reporting industry conditions are better than they were in the previous quarter, while any rating under 50 indicates a higher share of respondents reporting conditions are worse than they were in the previous quarter.
Plumbing contractors reported a lower future confidence index of 42.2 percent, versus 48.9 percent in the fourth quarter 2022, indicating that contractors who own plumbing businesses believe industry conditions were worse than the previous six months. HVAC contractors reported a higher future confidence index of 56 percent, versus 60.6 percent in the fourth quarter, suggesting industry conditions still feel better than the previous six months, though sentiment is trending lower.
The top contractor challenges reported were the following:
While roughly 70 percent of PHCC Contractor respondents anticipated normal to better sales in the future, 30 percent of respondents are not operating with a full staff, employees, and technicians. Double the number of respondents reported that customers are holding off on projects and replacements due to economic concerns — a significant increase when compared to fourth quarter results. 72 percent cited rising costs, and half of the respondents noted delays in shipping materials. The results were flat at 25 percent for those who indicated concerns about lower construction starts when compared to the last quarter.
Looking ahead, 73 percent of PHCC respondents are anticipating increased cost of doing business (parts, materials, labor), and most of those respondents are worried about an impeding recession, as well as continued challenges finding qualified employees and technicians.
The top three concerns for contractors over the next six months include the cost of health insurance, fear of recession, and increased (additional) insurance costs. Additional concerns were increased regulations, decreased construction starts, and cash flow.
"We are very pleased to unveil this first quarter 2023 Contractor Confidence Index that will help us determine the current sentiment of PHCC members," said PHCC—National Association President Dave Frame. "With access to this valuable information, our members will be able to track challenges and trends that affect their business, as well as maximize any business opportunities that are identified. And from an organization perspective, PHCC will be well-positioned to identify and develop programs and services that will meet our members' needs."
The PHCC Business Intelligence Department works to favorably position PHCC members and affiliates to achieve the highest level of market awareness, professionalism, leadership, and business profitability in the emerging and ever-changing built environment. Relevant resources are updated on a regular basis on the new PHCC Business Intelligence website: www.phccweb.org/business-intelligence.