Contractors, dealers optimistic

Contractors and equipment dealers across the U.S. continue to expect a positive flow in residential and nonresidential construction activity with an upward trend in the new equipment sales, according to the annual Wells Fargo Construction Industry Forecast.

The forecast, based on a survey measuring an optimism quotient, measuring the level of optimism equipment dealers and contractors have for the upcoming year.

This year’s forecast brought a score of 108—22 points behind 2015. But any number over 100 is considered highly positive, according to the report. The number is also the fifth highest level in the past 20 years.

This year brought 15 percent more respondents than the 2015 report with nearly 500 dealers and dealers participating.

On the local level, contractors and dealers are more positive these days.

“My findings lately have been, in talking with the dealers and the contractors that I call on in Las Vegas, these past few years have been rough,” said Steve Pratt of Wells Fargo Equipment Finance. “But for 2015, for most of the contractors I talked with, they noticed some positive change, and there’s optimism that that trend will continue into 2016, not in a real vertical sense, but on a more linear growth pattern.”

This goes for both the residential and commercial sectors, according to Pratt.

In the actual sales of equipment, Pratt said many of the local contractors are a little gun shy after having to go through the recession, when they had a lot of equipment and no work. Rental deals have allowed contractors to use equipment and not be obligated for a long period of time.

These opinions are beginning to temper with more available work coming online, said Pratt.

Much of the contractor’s equipment is old and worn out and needs to be upgraded, Pratt added.

“There’s a general feeling that there may be a little more buying this year than renting,” said Pratt.

On the national level’s nonresidential sector, the number of contractors and dealers expecting growth in the industry has fallen.

On the contractor side, the number went from 59 to 48 percent on future increases. On the distributor side, the number fell from 72 to 50 percent. The number of contractors and distributor who think the number would stay the same stayed about the same, averaging around 40 percent.

The number of distributors forecasting an increase in new equipment sales in 2016 also fell dramatically this year from 70 percent down to 50 percent. Dealers of used equipment had a similar view.

In contrast, on the national scale, contractors see an increase in new equipment sales. However, 4 percent fewer used equipment dealers are optimistic than last year.

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