The construction industry continues on an upward path with steady improvement in construction activity for the fourth year in a row, according to the latest Construction Executive Survey from Wells Fargo Equipment Finance, a subsidiary of Wells Fargo & Company. More contractors and equipment distributors (57.7 percent) have seen “somewhat higher” or “much higher” activity over the past year, compared to 47.8 percent in 2012. Conducted Aug. 20 through Sept. 6, the survey recorded the responses of 348 construction industry executives from across the United States.
“The survey results demonstrate a healthy recovery in this industry and also call our attention to new trends like Internet purchasing,” said John Crum, senior vice president and national sales manager of the Construction Group at Wells Fargo Equipment Finance. “Contractors appear to be pleased with the results of their online purchases and we see confidence among this group that the new Tier IV standards will not negatively impact resale value of the equipment they will purchase.”
Highlights of the Q3-2013 Construction Executive Survey:
- Job growth is healthy: 60.4 percent of the construction executives said their company will hire new employees within the next six months, a significant increase from 41 percent in 2012. More than a third of construction executives (34.8 percent) said their company will not hire any employees in the next six months, while 4.9 percent said they may need to or will have to reduce their workforce, down from 15.5 percent in 2012.
- Construction activity improved: More than half of construction executives (57.7 percent) said construction activity was “somewhat higher” or “much higher” than a year ago. In the 2012 survey, 47.8 percent said activity was higher and in 2011, only 38.4 percent said activity had improved over the previous year. Since 2010, construction activity has improved nearly 30 percentage points, from 28.5 percent.
- Equipment pricing still rising: A significant percentage of construction executives (77.9 percent) are seeing “somewhat higher” or “much higher” equipment prices compared to a year ago (80.5 percent in 2012). Twenty-one percent say equipment prices are “about the same” compared to 17.9 percent a year ago.
- Tier 4 Pricing Impact: In this year’s survey, contractors were asked about their expectations for the long-term value of their Tier-4 equipment. Over 80 percent of respondents indicated that they expect similar or higher resale values on new Tier-4 equipment when compared to the equipment they currently own.
- Equipment rental: The percentage of dealers renting out a portion of their inventory is essentially unchanged from 2012. Forty-seven percent (47.1 percent) of dealers say they are renting “somewhat more” or “much more” than normal compared to 47.8 percent in 2012. Contractors, however, appear to be renting more than a year ago with 26.3 percent saying they are renting “somewhat more” or “much more” compared to 20.9 percent last year. Almost half (49.7 percent) say they are renting about the same amount as last year.
The Q3-2013 Construction Executive Survey continues the longstanding practice by Wells Fargo Equipment Finance and its predecessors to publish primary research findings for the construction industry.