THE 2005 outlook indicates that construction industry leaders are predicting a strong year ahead and their confidence has hit an all-time high, according to the annual CIT Construction Industry Forecast. Of nine US regions surveyed, six increased in optimism.
“In last year's CIT Construction Industry Forecast, construction industry executives told us that they could see the light at the end of the tunnel after several years of economic uncertainty,” said Roy Keller, president of CIT Equipment Finance, Tempe, Arizona. “This year, it looks like the industry has made its way out of the tunnel altogether and the forecast is brighter than at any time in the last decade.”
Now in its 29th year, the CIT Construction Industry Forecast independently surveys US construction executives on their perceptions of the state of the industry and trends for the coming year. Over 900 contractors and equipment distributors were surveyed via telephone interviews across the country.
The Optimism Quotient (OQ) is the forecast's primary indicator for assessing and comparing the respondents' level of confidence in the health of the construction industry. The OQ is a weighted and averaged number that expresses construction executives' perceptions of the industry's prospects for the coming year. Generally, a number of 100 or higher indicates strong optimism in the industry's one-year outlook while a number below 100 indicates a more cautious projection.
The 2005 Construction Industry Forecast's overall optimism quotient rose six points, from last year's 103 to 109, the highest-ever rating since the OQ was developed in 1995. The OQ for contractors dipped one point, and it rose 13 points for distributors.
After back-to-back years of growing optimism about the future, many construction contractors feel confident enough to increase their investment in new and used construction equipment in 2005. While the percentage of contractors planning to buy new equipment stayed about the same, they are planning to spend considerably more on their purchases in 2005 than they did in 2004.
With a booming market for new housing and softness in commercial construction activity in many parts of the country, contractors have focused most of their attention on residential construction in recent years. This year more builders said commercial construction was their main focus.