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Wells Fargo EF Construction Quarterly – Optimism Rising in 2012

February 23, 2012, 08:00 AM
Filed Under: Construction

The Q1 2012 Construction Quarterly published by Wells Fargo Equipment Finance, notes that despite chronically high unemployment and depressed public spending, total construction spending appears to have bottomed and construction executives are optimistic that non-residential construction in 2012 will be better than in 2011.

Each January Wells Fargo Equipment Finance surveys construction industry executives to gather insight into current business conditions and measure sentiment for activity in the coming year. In January 2012, 394 construction industry executives from across the country responded. Optimism about 2012 construction activity is rising as indicated by the annual Optimism Quotient (OQ) - the survey’s primary measurement of construction executive sentiment.

To read the full Wells Fargo Equipment Finance Construction Quarterly, click here.

To follow are highlights from report:

  • The worst is behind us... The OQ of 114 is a strong indicator that the industry expects 2012 non-residential construction activity to improve over last year. The 2012 OQ exceeds the score of 109 recorded in 2005, near the height of the construction boom. After falling to an all-time low score of 42 in 2009, the OQ climbed to 66 in 2010 and 96 in 2011.
  • The overall numbers of contractors remains a concern. In spite of rising optimism over the last three years, industry executives remain cautious about the amount of available work to sustain the current number of nonresidential construction contractors. About four in ten respondents (41.7%) said they expect fewer contractors in their markets by the end of the year. Only 10.4% expect the number of contractors in their area to increase in 2012.
  • Equipment distributors are very optimistic. When asked about their forecast for new equipment sales, 73.3% said they expect to sell more in 2012 than in 2011, and zero respondents said they expect a decrease in new equipment sales. Optimism among construction equipment distributors was high with nearly six in 10 distributors (58.1%) expecting an increase in local non-residential construction activity. Only 1.5% said they expect that activity to decrease in 2012.
  • Contractors are optimistic, but not as much. While 18.3% of contractors said they expect to acquire more new equipment in 2012 than they acquired in 2011, 52.5% said they would acquire the same amount and 29.2% said they expect to buy less new equipment in the coming year. 40.3% of contractors said they expect non-residential construction activity to increase in the coming year; 47.3% expect the same level; and 12.4% said they expect nonresidential activity levels todecrease.

To read the full Wells Fargo Equipment Finance Construction Quarterly, click here.

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