Contractors and equipment dealers are anticipating nonresidential construction and equipment sales and rentals will stay on the move in 2015, according to a national Wells Fargo Equipment Finance survey.
The survey, which measured the level of optimism dealers and contractors have for the coming year, known as the optimism quotient, reached record levels for the 2015 forecast at 130. The number is up 6 points from 124 in 2014 and marks the third increase in the past four years.
The numbers were released in February and the calculations were based on responses from 413 participating contractors and equipment dealers from across the U.S.
Local sentiment is in line with the national.
Dealers and contractors in the Las Vegas region are optimistic about the coming year, and some say they have seen a rise in the construction market, along with an increase in rentals and an increased interest in equipment purchases, according to Steve Pratt of Wells Fargo Equipment Finance.
“Optimism is as good as it’s been down there for several years,” Pratt said.
Contractors are finding work orders starting to match their positive thoughts.
One local contractor Pratt deals with hasn’t been able to find stable work inside the valley for the past five to six years, according to Pratt. In 2015, the contractor expects to stay local.
National construction activity levels ascended slightly in January from the previous year’s numbers, but fell below December levels, which were the highest in six years, according to the Associated General Contractors of America. The amount spent was $971 billion — 1.8 percent higher than last January.
On the local level, several types of projects are occurring in the city, from residential to highway and bridge work and some industrial work, Pratt said.
“There’s kind of a broad range, which is even more pleasing to the contractors,” Pratt said.
One of those areas is under threat, however.
According to a release by the General Contractors, federal funding for highway projects could run dry if a deal to fund a bill that covers federal highway dollars doesn’t come by May 31.
The bill, if not funded, could cause major setbacks for federally funded highway projects. The bill has historically been funded by a tax motorists pay at the pump on regular and diesel fuel. These taxes fill the Federal Highway Trust Fund, which was created in 1956 to fund highway projects. The decline stems from cars with higher fuel efficiency, and consumers driving fewer miles. In response, lawmakers are looking for funding alternatives.
The equipment rental industry has also seen an increase in revenue.
According to the survey, 62 percent of dealers said they are renting more equipment to contractors than a year ago. And 60 percent planned on increasing their fleet size in 2015.
Thirty-seven percent of contractors who rented heavy construction equipment in 2014 said they would increase the amount in 2015, the survey said. But 17 percent said they would rent less.
The most frequent answer given by contractors as to why they chose to rent over purchase was the need for project-specific equipment: 70 percent gave this response.
There are other reasons that contractors choose to rent over purchase new or used equipment.
“I think the rentals have been traditionally stronger, just because of the uncertainty,” Pratt said.
But the future might be more purchases.
“I think we’ll see a gradual move towards purchase,” Pratt said. “I think rentals will always be a part of that market … I think we’ll see some additional sales activity in Vegas this year.”