FALLS CHURCH, Va. — HVAC and plumbing contractors feel that industry conditions are better now than they were earlier this year, according to the latest quarterly report from the Plumbing-Heating-Cooling Contractors-National Association (PHCC).

The PHCC business intelligence department recently released its Q2 2023 Contractor Confidence Index (CCI). Sponsored by Bradford White Corp., a PHCC partner, the CCI is based on a quarterly survey of PHCC members and is designed to take the pulse of the plumbing, heating, ventilation, and cooling contracting market.

The second-quarter 2023 CCI summary report revealed a CCI of 56.2. This is up from 52.2 in the first quarter, although respondents cited ongoing frustrations as well as concern about the possibility of a recession.

The number of plumbing contractors reporting concerns about a recession rose sharply, by 25%, as did the number of respondents who said customers were holding off on projects and replacements. Over half of respondents saw increased operational and materials costs, and just under half were experiencing shipping delays, as well as parts and equipment shortages.

Participating business owners expressed disappointment about sagging sales closing rates. Respondents also noted that general contractors are taking longer to pay for work performed, as well as holding project retainages for a longer period of time. Concern was also expressed about significant delays from design teams in producing contract documents on most projects.

Plumbing-only contractors specifically reported a confidence index of 49.2%, versus 61.4% for HVAC-only contractors. This breakdown follows the trend of the past few indices, with HVAC contractors consistently reporting higher confidence than plumbing contractors.

Top contractor challenges identified included:

• Finding and hiring trained and skilled employees for both plumbing & HVAC.

• Inflation, lower ROI, high diesel prices, high costs for new construction and remodeling.

• Increased operating costs due to increased cost of living and increase in materials costs.

• Difficulty getting equipment repaired on a timely basis.

• Availability issues with materials and high and rising insurance costs.

Roughly 62% of PHCC contractors anticipated normal to better sales in the future. Forty percent are not operating with full staffs, down from 47.1% in the first quarter. About 68% of respondents reported rising costs, and 40% of respondents noted delays in shipping.

Looking ahead, 71.1% of CCI respondents are anticipating increased costs of doing business (parts, materials, labor), and more than half are worried about a possible recession, as well as continued challenges finding qualified employees and technicians.

The top concerns that contractors reported regarding the next six months included staffing, continued disruptions with oil boiler heating products, and further supply chain issues.

The PHCC’s CCI is based on a quarterly survey of PHCC members. The survey asks respondents to rate market conditions for the present and for the next six months. Survey results and the CCI were developed as a general sense of contractor sentiment and should not be used as a guaranteed indication of future performance of the economy and the industry. Many PHCC contractors provide both plumbing and HVAC installation and service.