Two key indicators agree: Consumer confidence is surprisingly strong.
The Conference Board’s Consumer Confidence Index jumped to 109.7 in June, up from 102.5 in May and ahead of economists’ forecasts. Additionally, an increasing number of consumers expect business conditions to remain steady or improve.
“Consumer confidence improved in June to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,” according to Dana Peterson, chief economist at The Conference Board.
The University of Michigan Consumer Sentiment Index increased to 64.4, a four-month high and a strong increase from 59.2 in May. Also according to the report, year-ahead inflation expectations have fallen to 3.3%. Both indicators reflect relief due to the resolution of the debt ceiling crisis and growing confidence among consumers that inflation is softening, even as high prices persist.
According to a report from the Associated General Contractors of America, total construction spending is up 7.2% year-over-year, with gains in the multifamily and nonresidential sectors compensating for declines in single-family home construction. Additionally, the report indicated that spending on private nonresidential construction jumped 31.2% from April 2022 to April 2023, the largest yearly gain in more than 15 years. Public nonresidential construction increased 16.8% year-over-year, the largest jump in the 30-year history of the data.
“The top concern for most contractors is finding qualified workers, not projects to bid on,” said Ken Simonson, the association’s chief economist.
While there are well-documented labor shortages in construction and trucking, as well as an aging workforce, labor might not be the only concern. Material prices, long elevated since the pandemic, may stay flat instead of decreasing.
According to the Bureau of Labor Statistics (BLS), total nonfarm payroll employment rose by 339,000 in May. The construction industry led broad employment gains across categories, along with the professional and business services, government and health care industries. Construction added 25,000 jobs in May and is averaging 17,000 jobs per month over the last year. The overall unemployment rate rose to 3.7%, with nonseasonally adjusted unemployment in the construction industry at 3.5% in May, down from 4.1% in April 2023 and 3.8% in May 2022. Average hourly earnings for all employees on private nonfarm payrolls in April rose 11 cents to $33.44. Average hourly earnings have risen 4.3% over the last 12 months, outpacing inflation at 4.0% over the same period. Meanwhile, inflation rose just 0.1% in May.
Overview of Selected Materials Costs (May 2023, U.S. Bureau of Labor Statistics PPI)
According to EquipmentWatch, construction companies and fleet managers are increasing service budgets and holding on to used equipment. This reflects ongoing challenges in obtaining new equipment and purchasing affordable used equipment, even as prices have crept down since the start of the year. As a result, when your machines reach the end of their service lives, they are both much more expensive to replace and much less valuable on the resale market. It’s more important than ever to get the most from your fleet and ensure its ongoing operation.
We’ve covered ways to extend the functionality of your equipment through attachments. With T3, you can stay on top of preventative maintenance and extend the life of your machine. And of course, the EquipmentShare Shop has everything you need to keep your machines running smoothly.