Wells Fargo Survey: Construction Industry Expects Strong Profitability in 2022, Despite Supply Chain & Labor Challenges
January 18 2022 - 8:00AM
Business Wire
Optimism reaches highest level since 2019, 44% increase from
2021
Wells Fargo today released its 2022 Construction Industry
Forecast, showing renewed optimism among nonresidential contractors
and distributors for increasing profits and new equipment sales in
the year ahead. The benchmark U.S. National Optimism Quotient (OQ)
registered 112, a 44% increase from its mark of 78 a year earlier,
showing leaders ended 2021 feeling cautiously optimistic.
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Wells Fargo Survey: Construction Industry
Expects Strong Profitability in 2022 (Photo: Wells Fargo)
“Finding skilled workers and supply chain disruptions are
executives’ two biggest concerns,” said James Heron, national sales
manager for the Wells Fargo Equipment Finance Construction Group,
which has sponsored the report for its 46th year, cementing it as
the primary benchmark for the U.S. nonresidential construction
industry. “However, in this rapidly changing environment, they also
believe that the passing of the new Infrastructure Bill and
historically low interest rates will create new opportunities in
the future.”
Wells Fargo queried hundreds of industry executives nationwide
in September 2021 to determine this year’s National Optimism
Quotient, an outlook measure for nonresidential construction
business for the year ahead. The survey posed questions about
equipment sales, purchase expectations, and rental market trends,
while also exploring major cost and risk concerns that industry
executives were considering as they geared up for the new year.
At 112, the 2022 score represents a significant increase
compared to the 2021 OQ of 78, and exceeds the 2020 OQ of 99. An OQ
score of 100 or more represents strong optimism for increased local
construction activity relative to the perceived level of activity
for the prior calendar year. Any score between 75 and 99 is
considered more cautious or measured optimism. A score below 75
signals that most responding executives believe local construction
activity will decrease — a more pessimistic point of view.
Key findings in the 2022 Construction Industry Forecast
include:
Industry optimism
- Optimism rebounded from 78 up to 112
- Contractors and distributors alike are optimistic in their
outlook for local, nonresidential construction; roughly half expect
it to increase compared to 2021.
Top risks, financial concerns and opportunities
- Executives state that the greatest risks to the construction
industry are the availability of skilled workers and supply chain
disruptions, followed by rising material costs and inflation.
- Key opportunities, noted by executives, lie in an improved
overall economy, improved qualified labor availability, the recent
Congressional passage of the Infrastructure Bill, and low interest
rates.
Equipment acquisition
- Distributors are largely optimistic about sales of new
equipment with 61% stating they expect an increase in sales;
contractors have mixed expectations: 43% feel it will remain the
same, 38% feel it will increase, 14% feel it will decrease.
More about the Construction Industry Forecast
The 2022 Construction Industry Forecast results represent the
46th year that Wells Fargo Equipment Finance has surveyed
construction industry executives to gather insight into current
business conditions and trends and to measure sentiment. Responses
came from hundreds of industry executives in 46 U.S. states. Nearly
all of the respondents report that they have been in the industry
five years or more. To learn more, download the complete
Construction Forecast Survey.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a leading financial
services company that has approximately $1.9 trillion in assets,
proudly serves one in three U.S. households and more than 10% of
small businesses in the U.S., and is the leading middle market
banking provider in the U.S. We provide a diversified set of
banking, investment and mortgage products and services, as well as
consumer and commercial finance, through our four reportable
operating segments: Consumer Banking and Lending, Commercial
Banking, Corporate and Investment Banking, and Wealth &
Investment Management. Wells Fargo ranked No. 37 on Fortune’s 2021
rankings of America’s largest corporations. In the communities we
serve, the company focuses its social impact on building a
sustainable, inclusive future for all by supporting housing
affordability, small business growth, financial health, and a
low-carbon economy. News, insights, and perspectives from Wells
Fargo are also available at Wells Fargo Stories.
Additional information may be found at www.wellsfargo.com |
Twitter: @WellsFargo
News Release Category: WF-ERS
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version on businesswire.com: https://www.businesswire.com/news/home/20220118005455/en/
Media Trisha Schultz, 424-268-6202
trisha.schultz@wellsfargo.com
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