2012 Construction Forecast - and other economic news
The Wells Fargo Construction Quarterly newsletter for Q1-2012 makes four key points about the industry and economy.
1. The worst is behind us... The OQ of 114 is a strong indicator
that the U.S. construction 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.
2. ...but 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 non-residential
work to sustain the current number of 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.
3. 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 is high with nearly
six in 10 distributors (58.1%) expecting an increase in local nonresidential
construction activity. Only 1.5% said they expect that
activity to decrease in 2012.
4. 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, 29.2% said they expect to buy
less new equipment in the coming year. The other half (52.5%)
said they would acquire the same amount. 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 non-residential activity levels to decrease.