Construction industry survey has mixed results

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Each quarter Wells Fargo Equipment Finance, Inc. surveys construction industry executives to gather insight into current business conditions. Although 37.0% of construction executives said they anticipate an increase in local non-residential construction activity more telling is that about half (48.5%) believe non-residential activity levels will remain at the low levels recorded in 2010.

Of those executives that expect a decrease compared to 2010 activity levels, 7 in 10 say they don’t expect an improvement until at least Q2 of 2012. States with a net “decrease” outlook for non-residential activity include Arizona, Minnesota, Nebraska North Dakota, and Wyoming.

In spite of a rising optimism over the last two years, overall sentiment is still rather pessimistic about the amount of work available to sustain the current numbers of construction contractors. Very few executives (5.9%) anticipate an increase in the number of contractors this year. 53% said they expect fewer contractors by the end of the year. This maybe an improvement from 2010 when 70% of executives surveyed said they expected fewer contractors by the end of the year.

On average, contractors said they work with 3.7 different equipment distributors. These totals are essentially unchanged from the 2010 survey and indicate few equipment distributors are able to meet all of a contractor’s needs or become its exclusive equipment supplier.

Other survey highlights include the following:

•The Optimism Quotient (OQ) for the U.S. going into 2011 is a modestly positive 96. This is a marked improvement over the 2010 score of 66 and the all-time low score of 42 recorded for 2009. (*In general, an OQ of 100 or more represents high optimism for increased local construction activity relative to the perceived level of activity for the prior year. A score above 75 represents more cautious or measured optimism. A score below 75 signals that fewer executives say local construction activity will increase than say it will decrease – a more pessimistic point of view.)

•For the 11th consecutive year U.S. construction equipment distributors are more optimistic about levels of local construction activity than contractors. The 14-point difference between contractors and equipment distributors is among the highest of the past decade.

•Nearly seven in 10 U.S. contractors (69%) said they intend to buy new construction equipment in 2011 marking a slight increase from the 62% in 2010.

•An even greater percentage of respondents (78.5%) said they intend to acquire used equipment this year. In 2010 only 61% said they planned on acquiring used construction equipment.

You can view the full report Here. The survey was made possible through the cooperation and support of Associated Equipment Distributors.

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