Nonresidential Growth Predicted

March 11, 2013

Nonresidential construction will improve this year say contractors and equipment dealers polled by Wells Fargo Equipment Finance. The firm’s Construction Optimism Quotient sentiment rating is 106 for the year, with 100 considered optimistic toward year-over-year improvement. The rating is part of the company’s 2013 Construction Industry Forecast.

“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 VP and national sales manager of the Construction Group.

Although the number is down from 114 in 2012, Wells Fargo said it still represents the third highest national optimism reading in the past 13 years with only 2012 and 2005 being higher. Executives continue to express sentiment that nonresidential construction activity in 2013 will improve compared to 2012.

The report also said that the industry expects rental fleets to continue to grow. 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 percent) indicated that they expect to increase the size of their rental fleet in 2013. Only 5.5 percent said they expect their rental fleet to decrease in 2013 compared to 2012.

Optimism about the residential side of construction was slightly higher than for nonresidential. More contractors expect residential activity to increase (46.7 percent) than to remain the same (45.5 percent) or decrease (7.8 percent).

Contractors expect to purchase new and used equipment this year, with 80.9 percent anticipating buying new and 80.3 percent used equipment. These numbers are down slightly from 2012.