CIT Releases 2007 Construction Industry Forecast
October 4, 2006 • CIT Construction, a member of the CIT Group, has published its 31st annual CIT Construction Industry Forecast. The Construction Industry Forecast surveys contractors and distributors in the construction industry to project the strength of the upcoming year compared to the previous year. Over 1,200 contractors and distributors were contacted to be a part of the survey, and a majority of those surveyed expect 2007 to be better than or equal to 2006.
“The numbers behind the Optimism Quotient scores tell a story of fundamental strength on a national level that should last through 2007,” Ron Riecks, president of CIT Construction, said. “You also will find the industry's underlying strength to have a decidedly regional flavor, reminding all of us that construction is essentially a local industry.”
According to the report, most contractors and distributors see a similar year in 2007, with 42% of contractors expecting to bid on more projects than in 2006. However the total number of people who feel this way is down from last year's 53%. Contractors and distributors both expect next year to be better or equal to 2006, with 78% of contractors and 79% of distributors commenting in this regard.
Forty percent of contractors who anticipate a slower year said higher interest rates are a significant factor, up from 15% in last year's survey. Another cause, according to the survey, might be a weaker economy.
While contractors expect to spend more money on new and used equipment in the next year, distributors see new equipment sales softening but an increase in used equipment sales. Contractors also stated that they would rather own their equipment than rent.
In CIT's Rental Overview, the survey showed that many expect little growth in the equipment rental market, and that rental rates are expected to increase in 2007. Half of the distributors surveyed expect their equipment rental income to grow in the next year, while the number of distributors planning to raise rental rates was 55%, the fifth consecutive year of increase in that area. For those contractors who do rent, the bigger equipment rental companies are still the most preferred option.
Also as part of the survey, contractors were asked to rank, by equipment type, what they expect to rent most often in 2007. Fourth most popular was aerial lifts, seventh was cranes, and ninth was forklifts. These followed the most popular categories, which were dirt equipment and small tools.
A complete copy of the forecast can be found at www.cit.com.
