Construction industry executives optimistic about 2013
Wells Fargo's Construction Optimism Quotient (OQ), the survey's primary benchmark for measuring contractor and equipment distributor sentiment, is at 106 for 2013, marking the second consecutive year with an optimistic reading. An OQ over 100 is considered optimistic sentiment.
This survey marks the 37th year in which Wells Fargo Equipment Finance, a subsidiary of Wells Fargo & Company, and its predecessors have published primary research findings for the infrastructure construction industry. Conducted between January 4 and January 18, 2013, the survey includes responses from 347 construction industry executives from across the U.S.
"It's great to see that contractors and equipment distributors expect non-residential construction activity in 2013 to retain the improvements they experienced in 2012. For most parts of the country, we expect to see modest improvement in overall construction activity and contractors anticipate acquiring additional heavy equipment to support this activity," said John Crum, senior vice president and national sales manager of the Construction Group at Wells Fargo Equipment Finance.
Although the Optimism Quotient is down from 114 in 2012, it still represents the third highest national optimism reading in the past 13 years with only 2012 and 2005 being higher. Optimism among construction equipment distributors remains high: rental fleet growth is anticipated to play an increasingly important role in the business model of distributors. About half of distributors (50.5%) indicated that they expect to increase the size of their rental fleet in 2013.
Optimism about the residential side of construction was slightly higher than for non-residential. There is significance in the fact that more contractors expect residential activity to increase (46.7%) than to remain the same (45.5%) or decrease (7.8%). In 2013, 80.9% of contractors indicated that they anticipate buying new equipment and 80.3% indicated that they will buy used equipment. ■