Infrastructure and equipment markets surveyed for the 2024 Annual Report & Forecast fell slightly short of expectations in 2023, mainly because one market lagged the others: water infrastructure. The overall outlook for 2023 had been forecast to be “very good,” but the result for business in these construction markets was “good” in 2023.
The overall forecast for business in these construction markets remains “good” for the upcoming year of 2024.
Read also: 2024 Prices Remain a Concern for Fleets
Construction Equipment partnered with sibling magazines within Endeavor Business Media that cover infrastructure and equipment: Roads & Bridges, Wastewater Digest, and Rental Equipment Register.
The water infrastructure market, bogged down with regulations and policy uncertainty, continues to show unfulfilled expectations with the federal spending unleased by the Infrastructure Investment and Jobs Act (IIJA). It expected 2023 to be “good,” but it turned out to be an “average” business year. Expectations are that 2024 will be “good.” Transportation infrastructure, on the other hand, reported a “very good” 2023 after forecasting a “good” business year. Expectations for 2024 drop back to “good.”
In the rental industry, representing firms that rent equipment into construction markets, 2023 was “very good.” Expectations for this year drop to “good.”
For those who manage fleets of construction equipment and trucks for all vocations, the optimism reported in 2023 remains. The “very good” business year rating of 2023 remains “very good” as fleet managers forecast 2024.
Contract volume trends exceeded expectations in 2023, although water infrastructure lagged the other vocations. The overall net for 2023 (the percentage expecting increased volume minus the percentage expecting decreased volume) was 31.3%, nearly three times the net forecast for the year (9.2%). Rental houses reported a strong net in 2023 of 69.1% and predict continued growth in 2024 with a net of 42.7%.
Six of 10 respondents said 2024 volume will be higher than it was in 2023. For the overall net forecast of 36.4% in 2024, 49.6% of respondents expect revenue increases and 13.2% expect revenue to decrease for the year.
Inflation effects linger
Inflation exploded during 2023, and its effects are expected to influence materials pricing into 2024. More than three-quarters (77.8%) of respondents expect prices of construction materials to increase in 2024. Subtract the 17.3% who expect these prices to decrease, and the net for price expecations for 2024 is 72.9%, far above the 2023 number of 42.8%.
Expectations for bid prices in 2024 are also high. Overall, the net expectation is 69.6%. Three-quarters of respondents expect bid prices to increase in 2024; 19.8% expect them to decrease. The greatest increases are expected among water infrastructure respondents (85.4% expect bids to go up) and fleet managers (76.5% expect bids to increase). Transportation industry respondents forecast of net of 63.7% for next year.
The competitive landscape is “intensely” or “very” competitive for 57.6% of respondents. Equipment respondents, both fleet managers and rental firms, reported the highest levels of competition with 67.6% and 69.1%, respectively, labeling it as either “intensely” or “very” competitive. Infrastructure markets, both water and transportation, said the same at 40.5% and 56.1%, respectively.
Firm health inched up slightly for the overall group of respondents, with 74.3% saying it was “very good” or “good.” The pre-pandemic level was 80%, indicating there are still some room for improvement. Among individual respondents, rental firms report the largest percentage of “very good” or “good” firm health at 86.7%.
