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2017: A look forward

The 2017 Construction Industry Forecast report shows contractors and equipment distributors have a positive outlook for 2017.  View the full report to find out when they expect construction activity —

from equipment purchase intentions to rental trends — to pick up.

Insights from Wells Fargo
Equipment Finance

Watch the video as John Crum, Wells Fargo Equipment Finance Construction Group national sales manager,

discusses the survey findings. Learn what construction contractors and equipment distributors are expecting in 2017. Topics include equipment purchase intentions, rental trends, and more.

U.S. national Optimism Quotient (OQ)

The OQ is a measurement of survey respondents’ sentiments about nonresidential construction activity. It is directional in nature and tells us whether industry executives believe activity will be higher or lower than in the previous year. The OQ for 2017 is a highly optimistic 123. This is one of the highest levels historically —

the third highest point in the past 20 years — and represents a significant rebound from the 2016 forecast.

Industry outlook

Optimism levels for suppliers and contractors remained high, both rising from levels in 2016.

Equipment sales (new and used)

Due to increased optimism, distributors expect new equipment sales to increase

substantially, and expect used equipment sales to increase moderately.

Equipment rentals (contractors)

Contractors, increasingly expect equipment purchases to remain

the same as 2016 and are more worried about equipment costs.

Contractors anticipate relying on rental equipment more often
unless rental costs increase or a larger backlog of jobs occurs.

(Contractors) What would need to happen for you to want to buy construction equipment instead of renting?

A stronger backlog of jobs would most motivate
contractors’ construction equipment purchases.

Equipment rental (distributors)

For distributors and rental companies, growth in the rental market is expected to soften in 2017.

 

Since 2014, more distributors expect the sizes of their rental fleets to decrease.

Top concerns

Many survey respondents express concerns for political and regulatory uncertainty

and national and local economies, but feel cautiously optimistic.

About us

Wells Fargo Equipment Finance (WFEF) provides businesses nationwide with competitive fixed- and floating-rate loans and leases covering a full range of commercial equipment, floor planning, and inventory financing. WFEF has industry financing specialists dedicated to construction, energy, commercial and specialty vehicles, marine, rail, aircraft, and vendor financing programs.

 

We offer a broad range of direct and vendor finance programs for equipment end-users, distributors, and manufacturers in the United States and Canada. Wells Fargo Equipment Finance is the #1 equipment finance provider in the U.S. and Canada with more than $48 billion in assets under management,1, 2 more than 325,000 customers, and 2,300 team members.3

 

Construction equipment financing

We have deep domain expertise in the construction industry and offer tailored financing and leasing solutions. Our nationwide coverage allows us to connect our customers with the correct products to meet their financial needs. WFEF is the only provider that offers complete, creative financial solutions for the entire industry. With end-user leases and loans, dealer retail referral programs, dealer rental fleet and floorplan financing, and manufacturer subsidized retail and inventory programs, WFEF has products suited to your particular needs.

 

For more information and assistance, please contact your local representative.

 

U.S. construction contacts (PDF)

 

U.S. inventory contacts (PDF)

 

Vendor Financial Services contacts (PDF)

The 2017 Construction Industry Forecast

This report presents the results of Wells Fargo Equipment Finance’s wide-ranging survey of construction industry executives conducted in fall 2016. Drawing on the responses of construction contractors and equipment distributors from across the U.S., the forecast reveals trends in the industry and gauges the sentiment of industry leaders on a variety of business topics. Download the full report to find out more.

  1. Based on current net assets of Wells Fargo Equipment Finance (including Wells Fargo Rail Corporation and GE Capital) compared to net assets of the largest equipment finance/leasing companies ranked in the 2016 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, 2016.

Insights from Wells Fargo
Equipment Finance

Watch the video as John Crum, Wells Fargo Equipment Finance Construction Group national sales manager, discusses the survey findings. Learn what construction contractors and equipment distributors are expecting in 2017. Topics include equipment purchase intentions, rental trends, and more.

U.S. national Optimism Quotient (OQ)

Construction optimism quotient remains very positive for 2017.

The OQ is a measurement of survey respondents’ sentiments about nonresidential construction activity. It is directional in nature and tells us whether industry executives believe activity will be higher or lower than in the previous year. The OQ for 2017 is a highly optimistic 123. This is one of the highest levels historically — the third highest point in the past 20 years — and represents a significant rebound from the 2016 forecast.

Overall optimism remains strong.

150

125

100

102

86

80

42

66

96

114

2006

2007

2008

2009

Great Recession

Economic recovery

2010

2011

2012

2013

2014

2015

2016

2017

106

124

130

108

123

75

50

25

Highly optimistic (100+)

Cautiously optimistic (75-99)

Pessimistic (0-74)

Industry Outlook

Optimism levels for suppliers and contractors remained high, both rising from levels in 2016.

114

111

2016

2016

2017

2017

Distributor Optimism

Contractor Optimism

129

117

A belief that there will be significant expansion in the U.S. construction industry in the next two years likely fuels this surge in optimism.

Equipment sales (new and used)

Due to increased optimism, distributors expect new equipment sales to increase substantially, and expect used equipment sales to increase moderately.

A growing majority of executives believe the industry will expand in the next two years.

62% expansion

6%

56%

23%

14%

2016

75% expansion

7%

68%

16%

7%

2015

84% expansion

23%

61%

10%

6%

2017

Significant expansion

Moderate expansion

No change

Moderate contraction

Equipment rentals (contractors)

Contractors, who are less optimistic overall, increasingly expect equipment purchases to remain the same as 2016 and are more worried about equipment costs.

Contractors anticipate relying on rental equipment more often unless rental costs increase or a larger backlog of jobs occurs.

49%

31%

20%

2017

58%

28%

14%

2016

49% of contractors would consider buying instead of renting if rental costs increased 15% or more. 20% of contractors are saying it would only take a slight increase.

Significant increase (15%)

Moderate expansion

Slight increase (less than 5%)

A stronger backlog of jobs would most motivate contractors’ construction equipment purchases.

(Contractors) What would need to happen for you to want to buy construction equipment?

18% Long term confidence in the local economy.

10% Lower equipment costs.

29% Stronger backlog of jobs.

18% Long term confidence in the national economy.

Equipment rentals (distributors)

For distributors and rental companies, growth in the retail market is softening in 2017.

 

Since 2014, more distributors expect the sizes of their rental fleets to decrease.

54%

43%

2014

60%

33%

7%

2015

44%

45%

11%

2016

40%

44%

16%

2017

Increase

Remain the same

Decrease

2014

2017

Top concerns

Many survey respondents express concerns for political and regulatory uncertainty and national and local economies, but feel cautiously optimistic.

Improving the national economy remains the greatest opportunity for industry growth in 2017.

There is an increase in concerns about rising materials costs, residential construction market, and tier IV emission standards.

Year after year, executives consider tax incentives to be critical regulatory issue of interest.

Many executives believe that improving the political climate would encourage growth in the industry.

2017: A look forward

The 2017 Construction Industry Forecast report shows contractors and equipment distributors have a positive outlook for 2017.  View the full report to find out when they expect construction activity — from equipment purchase intentions to rental trends — to pick up.