Wells Fargo Releases Its 2023 Construction Industry Forecast
Wells Fargo released its 2023 Construction Industry Forecast, a survey designed to gather insights on sentiment and current business conditions in the construction industry. This year’s survey indicates 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, however, 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,” said James Heron, National Sales Manager for the Wells Fargo Equipment Finance Construction Group which sponsored the report for its 47th year. “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 percent of surveyed businesses, while increased material cost has impacted profitability for more than 59 percent of businesses surveyed.
Equipment acquisition
Over 50 percent 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 percent of their fleet.
To learn more, download the complete Construction Forecast Survey.
Equipment Finance Industry Confidence Improves in February
The Equipment Leasing & Finance Foundation has released its February 2023 Monthly Confidence Index for the Equipment Finance Industry, which shows an increase in confidence in the equipment finance market to 51.8, up from 48.5 in January. The report indicates that pent-up demand in the light and medium-duty transportation segment is expected to decline by the third or fourth quarter of this year. Survey results show that 16.1% of executives expect business conditions to improve over the next four months, while 9.7% believe demand for leases and loans to fund capital expenditures will increase. 38.7% of respondents expect to hire more employees over the next four months, and 51.6% believe their companies will increase spending on business development activities over the next six months.
NFIB Jobs Report: Small Business Job Openings Back Up in January
According to NFIB’s monthly jobs report, 57 percent of owners reported hiring or trying to hire in January, up two points. Of those hiring or trying to hire, 91 percent of owners reported few or no qualified applicants for the positions they were trying to fill. Twenty-seven percent of owners reported few qualified applicants for their open positions and 25 percent reported none.
“The labor shortage continues to be a major concern for small businesses in the New Year as nearly all owners trying to hire are reporting no or few qualified applicants,” said NFIB Chief Economist Bill Dunkelberg. “Small businesses’ sales opportunities are limited because of the staffing shortage but owners continue to make changes in business operations to compensate.”
Forty-five percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, up four points from December.
Small business owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 19 percent planning to create new jobs in the next three months, up two points from December but 13 points below its record-high reading of 32 reached in August 2021.
The percent of owners reporting labor quality as their top business operating problem remains elevated at 24 percent. Labor costs reported as the single most important problem to business owners increased two points to 10 percent, historically among the highest readings in over 49 years.
Seasonally adjusted, a net 46 percent of owners reported raising compensation, up two points from December and just four points below the 49-year average record high set in January last year. A net 22 percent of owners plan to raise compensation in the next three months, down five points from December. This is a major concern of the Federal Reserve, as these increased costs are likely to be passed on in higher selling prices.
Thirty-six percent of owners have job openings for skilled workers and 17 percent have openings for unskilled labor.
Click here to view the full report.
Check These Steps to Make Sure Your Small Business is Ready to Grow
You may be ready to take your small business to the next level, but is your small business ready to grow? Expanding a small business can take many forms, like hiring more employees, adding products or services, opening a new location, purchasing your commercial space, entering a new geographic market, or buying another business out.
Before you take any of these leaps for your small business, check off the items below to make sure you’re growing on a stable foundation.
Financial Readiness
Growing small businesses need capital. Whether you are looking for investors, applying for a small business loan or SBA loan, or applying for a business grant or SSBCI opportunity in your state, you will need to know your financials inside and out and have them in a presentable, dynamic form.
Are your financial documents up-to-date? You must be able to show your business’s financial health, and to do that you need these documents on-hand. If you are not able to prepare them internally, consider investing in a certified public accountant (CPA).
Personal and Business Tax Returns
Income Statement (or “Profit & Loss”)
Balance Sheet
Personal and Business Credit Reports
Business Bank Statements
Is your business plan pitch-ready? If you present a possible lender or investor with a business plan that you’ve invested time and care into preparing, you will be more likely to succeed. Financial statements are part of your business plan, but it also shows your history, your plans, and the data your plans are based on.
Are your expenses under control? It’s important to know what your expenses are and eliminate any unnecessary bills. This is essential because, as we have learned in recent years, disruptions can come from nowhere. If your expenses are kept under scrutiny, you’ll increase your profits and be ahead of the game if circumstances outside your control affect your revenue.
Operational Readiness
Growing small businesses rely on quality employees to get the job done. Whether you’re a sole proprietor, or a team of ten or fewer employees, you must be ready to be a responsible, attractive employer before your team increases.
Do your current and future employees have the tools they need to succeed? Even small teams need to be able to communicate with each other and complete their tasks efficiently. These days, this means investing in technology to support their tasks, and provide you with the reporting you need to optimize their roles. Take the time to review the tools you use to process payments from customers, respond to their needs, organize data, and perform internal tasks.
Is your operational infrastructure ready to support a growing team? Hiring employees means taking responsibility for their well-being at while at work, and providing competitive compensation that make them glad to stay. Millennials have high expectations from their employers to provide transparent communication from leadership, diversity & inclusion policies, quality benefits, and more money than they could make on their own as Uber drivers.
What is your hiring strategy, and what roles do you need to fill right away? Before you and your current team burn out, identify the tasks that could be built into new roles, including your own, by asking yourself these questions:
What are you bad at?
What tasks do you hate doing?
What tasks are going undone due to time constraints, by you or your team?
What goals do you have for your business?
Market Readiness
Growing businesses need to be easy to find, and easily recognized in their community or industry. Marketing plans help customers discover your business, engage with it in a positive way, and associate it with the need it fulfills.
Is your small business website and social media up to today’s customer expectations? Over 80% of consumers navigate websites on their phones. Millennials and Gen Z, who have lived their whole lives online, expect websites to be easy to read, pleasant to look at, and convenient and quick to navigate. If they’re not (1) interested (2) looking at what they’re looking for in 8 seconds, they’ll close it and go elsewhere. They also expect to engage with you on social media, so consider this when making your staffing plan.
Have you defined your brand? Your brand is an external expression of your business’s core values. Before making any choices about colors, graphics, and voice, you have to be able to express what your core values are, and what tone best serves those values. It’s hard to make big changes once you’ve gained momentum, so be true to your business, and define your brand before you grow.
Do you have a marketing plan? Marketing is more than a website and social media, it answers the questions (1) What you do, and (2) Why others should care. Most importantly, it answers these questions before someone else answers them for you. With a marketing plan you identify your target market, research who else is getting their attention, including your competitors, and strategize how you will get in front of them and get them to care about your business.
Disaster Readiness
Growing businesses must be ready to weather a storm. The whole world learned in 2020 that anything can happen at any time. It won’t always be the scope of a pandemic, but even localized disruptions and disasters can cause setbacks for your business.
Do you have a data security and back-up strategy? In the age of data, customers expect the businesses they share their information with to keep it safe. Internally, you also must consider how you store and back up the data your business relies on.
What’s your Disaster Recovery Plan? Ready.gov provides information and resources to help businesses prepare for disasters that come from technology, weather, and other types of risk.
TD and First Horizon Extend Outside Date of Proposed Merger to May 27
TD Bank Group and First Horizon Corporation have mutually agreed to extend the outside date of their proposed transaction from Feb. 27 to May 27, 2023, in accordance with the terms of the merger agreement.
TD and First Horizon are fully committed to the merger and continue to make significant progress in planning for the closing and the integration of the companies. Shareholders of First Horizon have voted overwhelmingly to approve the transaction, and progress is being made on a Community Benefits Plan in support of local communities across the TD and First Horizon footprints in the U.S.
Customary closing conditions, including approvals from regulatory authorities in the U.S. and Canada, are required to close the transaction.