Increased Spending Forecast in 2007CED Magazine November 2006
Article Date: 11-01-2006
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Respondents to survey are viewing 2007 with cautious optimism.
Forty-five percent of contractors surveyed by CIT Construction for its 31st Annual Construction Industry Forecast say they'll purchase new and used equipment next year.
CIT, a provider of financial services to the construction industry in North America, surveyed more than 900
contractors and equipment dealers by telephone.
"The CIT Construction Industry Forecast highlights the fact that the U.S. construction industry remains cautiously optimistic about 2007," says Ron Riecks, president of CIT Construction. "While the level of optimism varied across the United States, many respondents indicated they planned to increase their spending on new and used equipment in the coming year, which portends to more activity in the industry."
The forecast uses its Optimism Quotient as the primary indicator for assessing and comparing the respondents' level of confidence in the health of the construction industry. Generally, a number of 100 or greater indicates strong optimism in the industry's one-year outlook while a quotient below 100 indicates a more cautious projection.
In the most recent survey, the overall national optimism quotient fell 16 points from 102 to 86. However, the number of contractors who indicated they expect to spend more on new equipment increased 11 percent. Twenty-nine percent of contractors plan to spend more on used equipment, up 15 percent from 2005. Used equipment spending plans have risen steadily for three consecutive years.
Forty-five percent of contractors expect to acquire equipment next year. And although fewer distributors expect an increase in new equipment sales, they anticipate a 20 percent increase in revenue in 2007, up from an estimated 18 percent in 2006.
Fourteen percent of contractors say they expect to meet 14 percent of their 2007 equipment needs with rental or leasing, down slightly from a projection of 16 percent in the 2006 Forecast.
Half of the distributors surveyed expect equipment rental income to grow next year. The number of distributors planning to raise rental rates increased for the fifth consecutive year to 55 percent.
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