Construction Executives More Optimistic Despite Uncertainty, Wells Fargo Report Says

Construction has improved over the past year, although 61 percent of construction executives say the downturn in the construction industry won’t be over for at least another year, according to the Q3-2012 Construction Executive Survey by Wells Fargo Equipment Finance. Passage of the new two-year funding bill for the federal highway program has sparked modest optimism that construction activity might improve in the near term, although the optimism is tempered by uncertainty surrounding the 2012 election.

Survey respondents report that pricing trends are up, with at least modest cost increases on construction materials, equipment acquisition and equipment rental. The cost-increase trend is more pronounced than a year ago, executives say.

In contrast to last year’s survey, neither contractors nor distributors expressed much concern about product availability, with executives that tried to acquire equipment saying they had no trouble getting what they needed, with delays being mostly minor.

Because of uncertainty about the economy, about 43 percent of respondents said they don’t intend to hire during the next six months, with 37 percent saying they will hire only a few employees.

Looking back at 2012, 47.8 percent of the respondents said construction activity was “somewhat higher” or “much higher” than the previous year. In 2011, that percentage was 38.4. A few respondents (18.4 percent) said activity was lower during the past year, while 24.1 percent said that last year. Almost half of equipment distributors surveyed (48.6 percent) said construction activity was somewhat or much higher.

Almost half of respondents (44.7 percent) said equipment rental rates were “somewhat higher” or “much higher” than in 2011, with rates — as well as construction materials and equipment prices — rising at a faster clip than a year ago.

For the complete Wells Fargo Construction Executive Survey, click on http://images-mail.wellsfargoemail.com/Web/WellsFargoWholesaleServices/%7Bd8b92970-0768-4256-8fe9-aa908cd52d27%7D_425_WFEFI_CQ_3Q2012_2.pdf