Equipment sales and purchases2017 was a good year for equipment sales, and according to the industry, 2018 could see further improvements. Seventy-six percent of distributors said that their sales of new equipment will increase, while 78 percent say their sales of used equipment will increase. On the contractor side, 37 percent indicate that they will purchase more new, while 27 percent indicate they will purchase more used. "One key factor to look at in the results is that the percentage of contractors who said they would buy less new and used equipment in 2018 shrunk to the lowest levels in five years," Crum added. Distributors and rental companies indicated that their rental fleets will increase in 2018 over 2017, with 55 percent indicating their intention to expand. Notably, only 7 percent say they will decrease the size of their fleets. The survey asked companies who rent construction equipment about what would happen in the event that the cost of renting should increase. Respondents indicated that an increase in rental costs of 5 to 15 percent would make 63 percent of those surveyed consider purchasing equipment rather than renting. "That such a small increase in rental costs would make companies who rent equipment consider buying instead of renting indicates that the industry is at equilibrium between availability and pricing of rental equipment," said Crum. Top concerns and industry awareness While net profit expectations remain positive, finding and paying for skilled labor and healthcare costs remain top concerns that will have a potential impact on net profits. Employee wages and other benefits (31 percent), and healthcare costs (18 percent), ranked as contractors' top cost concerns. Meanwhile, concerns over equipment costs (20 percent) and equipment rental costs (20 percent) remained top of mind for distributors. One in two respondents said that they are aware of pending changes to the accounting rules for leasing, with about 50 percent anticipating somewhat of an impact or even a great deal of impact on their business; about 20 percent expect no impact at all. Fewer respondents, just over a third, are somewhat or very concerned about the effect new regulations will have on their business while 28 percent express no concern at all.
How does Optimism Quotient compare to other key economic indices?This year, the Construction Industry Forecast analyzed and compared the data to four other economic indices for the construction industry outlook, including the Architectural Billings Index, the Private Construction Index, the Industrial Production Index and the Nonresidential Construction Index. Although there are differences in any given year, the overall data shows that the Optimism Quotient tracks closely with these economic indices. See detailed charts on page 5 of the report. Net profits on the rise The industry feels increasingly positive about profits. Ninety-two percent of respondents said net profits will either remain the same or increase from 2017, with 61 percent expecting an increase in profitability. More about the Construction Industry Forecast The survey results presented in this 2018 Construction Industry Forecast represent the 42 nd year in which Wells Fargo Equipment Finance and its predecessors have surveyed construction industry executives to gather insight into current business conditions and trends, and to measure their sentiment toward construction activity in the coming year. To learn more, download the complete report. Year-over-year OQ comparison
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1. 2017 Monitor 100.2. Equipment financing transactions are provided in Canada by Wells Fargo Equipment Finance Company. Wells Fargo Equipment Finance Company is an affiliate of Wells Fargo & Company, a company that is not regulated as a financial institution, a bank or holding company or an insurance holding company in Canada.3. Company data as of March 31, 2017.About Wells Fargo Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $2.0 trillion in assets. Wells Fargo's vision is to satisfy our customers' financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investments, mortgage, and consumer and commercial finance through more than 8,300 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 263,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune's 2017 rankings of America's largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.