Wells Fargo released its 2023 Construction Industry Forecast, a survey designed to gather insights on sentiment and current business conditions in the construction industry. The results suggest a level of cautious optimism prevailing among nonresidential contractors and distributors. Most notably, respondents shared several top concerns, including the availability of skilled workers, rising interest rates, economic uncertainty and supply chain disruptions. Despite the economic challenges of 2022, the non-residential construction industry largely maintains a hopeful long-term outlook for 2023.

“Adapting to ongoing economic uncertainty and impacts of increasing interest rates are two of the primary concerns for construction executives,” James Heron, national sales manager for the equipment finance construction group at Wells Fargo, said. “Despite a number of market variables, the level of optimism reflected in the 2023 forecast survey confirms industry leaders maintain a deep-seated belief in economic recovery.”

Key findings in the 2023 Construction Industry Forecast include:

Cautious optimism remains the dominant sentiment within non-residential construction

• The economic environment has caused a divide in perspective and expectation among executives. Those who continue to feel that non-residential construction will remain at current levels also expect activity will begin to increase in 2024 or later.
• However, those who do not believe non-residential construction will remain at current levels foresee that the industry will see a decrease in 2023.

Top risks, financial concerns, and opportunities

• Executives have four areas of concern: availability of skilled workers, economic uncertainty, rising interest rates and supply chain disruptions.
• Inflation has impacted more than 82% of surveyed businesses, while increased material cost has impacted profitability for more than 59% of businesses surveyed.

Equipment acquisition

• Over 50% of contractors expect to rent the same amount of heavy construction equipment in 2023; however, equipment purchases will be contingent on a stronger backlog of jobs and lower costs.
• Distributors report continuing to rent the same or more equipment now than a year ago and continue to utilize 70% of their fleet.