After two years of historically high levels of activity, growth in the construction market is expected to level off in 2000, according to a national survey of construction contractors and equipment distributors by CIT Group/Equipment Financing, a leading equipment financing company.
The 2000 Construction Industry Forecast, a comprehensive survey of 900 Presidents and CFOs of contractor and distributor firms across the country, showed that as a whole, survey respondents expect to maintain the same level of construction activity in 2000 as they experienced in 1999. As many as 55% of contractors foresee no changes, with builders voicing a strong vote at 59%. Roughly half of the distributors surveyed predict the same level of activity in non-residential building and 43% expect status quo for residential building construction.
The cornerstone of the forecast is the Optimism Quotient, which is used as a barometer for determining how confident construction industry executives are for the coming year. It is an averaged calculation of the percentage of survey respondents who expect local construction activity to change from the previous year. The more people who expect an increase in activity and the fewer who expect a decrease, the higher the quotient. An index above 100 indicates strong optimism for the coming year and high likelihood that construction activity will increase.
“The construction industry is entering the 21st century on solid ground, with this year’s Optimism Quotient at a healthy 102,” said Robert J. Merritt, President and CEO of CIT Group/Equipment Financing. “This figure, which is close to last year’s 104 Optimism Quotient, signals a year of slow but steady growth.”
Other findings show that almost half of all builders (49%) believe residential building presents the greatest opportunity for their businesses in 2000, followed by nonresidential building. Non-builders say their top two opportunities are commercial construction (32%) and water and sewer projects (14%).