Published by the PHCC Business Intelligence Team
Mission: 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.
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General Sentiment
Industry conditions are better than the previous six months but are trending lower because of ongoing challenges. Given that a majority respondents feel a recession is coming, a growing number of responses reflect that customers are holding off on projects and replacements due to economic concerns, and contractors are citing too much work, and low call volume for commercial and residential service when compared to the last quarter of 2022. Concern for increased regulations ticked up since the last quarter.
Any rating over 50 indicates a higher share of PHCC contractors reporting industry conditions are better than they were in the previous quarter. Any rating under 50 indicates a higher share of respondents reporting conditions are worse than they were the previous quarter.
Summary
The PHCC Contractor Confidence Index dropped to 52.2 in the first quarter of 2023 from 56.0 in the 4th quarter of 2022 from 114 survey respondents. Roughly 70 percent of PHCC Contractor responses anticipated normal to better sales in the future. 30 percent of respondents are not operating with 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 4th quarter results. 72 percent reported rising costs, and half of respondents noted delays in shipping materials. Results were flat at 25 percent for those who indicated concerns for 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, and continued challenges finding qualified employees and technicians.
Plumbing Contractors reported a lower future confidence index of 42.2 percent versus 48.9 in the fourth quarter of 2022- meaning that respondents feel conditions are worse than they were in the previous quarter. HVAC Contractors reported a higher future confidence index of 56 versus 60.6 percent in the fourth quarter of 2022—indicating industry conditions still feel better than they were in the previous quarter, but sentiment is trending lower.
Top PHCC Contractor Challenges
Not operating with full staff, employees, qualified technicians.- Customers holding off on projects. replacements due to economic concerns.
- Low call volume for residential service calls.
- Too much work.
- New construction slow down, projects on hold or cancelled.
Index Broken Down by Plumbing and HVAC
Manufacturers and Suppliers are Responsive to PHCC Contractors
- Nobody has any answers about equipment.
- Suppliers – yes, manufacturers – no.
- Lead times for HVACR Equipment too long.
- Still having issues [with] supply chain availability, delivery, and cost.
- Supplier used covid to shorten business hours and reduce services. More of a take it or leave it attitude.
Disruptions for PHCC Contractors
- Shortage of construction materials, equipment, or parts.
- Delays in shipping materials.
- Shorter operating hours for suppliers, difficult to get materials when needed.
- Cost increases.
- Finding qualified help, technicians.
Concerns for Next Six Months
Cost of health insurance.- The fear of a recession vs actual recession.
- Increased [additional] insurance costs.
Archive– For past editions of the quarterly PHCC Contractor Confidence Index (PHCC CCI), please visit the Business Intelligence library.
Disclaimer– The PHCC Contractor Confidence Index (PHCC CCI) is based on a quarterly survey of PHCC members designed to take the pulse of the plumbing heating and cooling market. The survey asks respondents to rate market conditions for the present time and for the next six months. Survey results and the PHCC CCI were developed as a general sense of contractor sentiment and should not be used as a guaranteed indication of future performance of economic and industry performance. Many PHCC Contractors provide both plumbing and HVAC installation and service.
Methodology- The PHCC Contractor Confidence Index (PHCC CCI) is an average result of two component indices: Current Activity for the Next Six Months and Future Sales over Next 6 months for PHCC plumbing and HVAC contractors. Each quarter, contractors rate the first on a scale of “sales up,” “sales normal” or “sales down” and the last on a scale of “Very good,” “good” or “normal,” “poor,” and “very poor.” An index is calculated for each series by applying the net promotor score methodology to produce the PHCC CCI.
About PHCC
The Plumbing-Heating-Cooling Contractors—National Association, formed in 1883, provides legislative advocacy, education and training to approximately 3,500 plumbing and HVACR businesses and 70,000 technicians. Members of PHCC have access to a wide variety of services designed to increase their professionalism, grow their business and improve profitability. For more information about PHCC, visit phccweb.org.
About the PHCC Business Intelligence (BI) Department
At PHCCCONNECT2021, the PHCC Board of Directors stood up a BI department to assist PHCC members and affiliates in achieving the highest level of market awareness, professionalism, leadership, and business profitability in our ever-changing industry. By providing a variety of BI products and services, the ultimate goal of the department is to position the PHCC contractor as the “Contractor of Choice” in the industry. PHCC members can view the BI resources here.