Many survey respondents expect comparable levels of construction activity in the non-residential and residential sectors, and that both will continue to fall. Forty-three percent of contractors and 39 percent of construction equipment distributors predicted a fall in non-residential activity in 2009, and 55 percent and 48 percent, respectively, predicted a decrease in residential work. Eleven percent of both contractors and distributors believe residential construction activity will increase. Non-residential construction appears to be in slightly better shape given that 15 percent of contractors and 17 percent of distributors forecast an increase in that type of work.
Most contractors (73 percent) and equipment distributors (63 percent) who foresee a decrease in construction activity see a turnaround coming 12, 18 or 24 months from the time of survey in October 2008. The largest share of these distributors (28 percent) and contractors (22 percent) predict that improvement will come 12 months from the time of survey.
The least pessimistic respondents were in the southern states of Texas, Oklahoma, Arkansas and Louisiana, Alabama, Kentucky, Mississippi and Tennessee. The most pessimistic were in New England, Pacific and southern Atlantic states.
There were other findings. More contractors plan to buy used equipment in 2009 than in 2008. Contractors expect to rent equipment slightly more often. Rental rates are expected to hold steady. Materials and fuel costs are still a concern. Financing programmes are the top strategy for increasing sales. Distributors expect the number of contractors to decline. More companies are buying and/or selling equipment on the internet.
“We took the pulse of the industry during a period of unprecedented turmoil and that certainly influences the numbers we are seeing,” said Ron Riecks, general manager for Wells Fargo Construction. “There is no doubt that there are serious economic issues yet to be faced, but construction is a cyclical industry. We’ve been down before, and we’re confident the construction industry will rebound. 2009 is going to be a difficult year but a government stimulus package with an infrastructure revitalization component could go a long way to helping this industry recover before the end of the year.”
In its 33rd edition, the Forecast – published by Wells Fargo Construction, a division of Wells Fargo Equipment Finance, Inc. – is based on telephone interviews with over 900 executives of construction contracting and equipment distribution companies from around the country. Surveys for this year’s Forecast were conducted during a six-week period in October and early November 2008, at a time of particularly heightened economic uncertainty.
