After a fairly quiet summer, contractors are expressing their greatest confidence in more than a year that the economy is securely on the upswing.
Although summer activity was relatively light overall, 15% of contractors describe their current backlogs as good or packed. And one in five contractors who reported weak backlogs of work is reporting a recent uptick in orders.
After three straight quarters of declining confidence in the next 12 months, contractor confidence bounced back by 16 percentage points over the summer, to a total of 42 percent. The percentage of contractors who expected business to stay about the same is now at 41 percent—its highest level in more than a year. And the percentage of contractors with a negative 12-month outlook plummeted by half over the summer to 17 percent—its lowest level in more than a year.
Those are some of the results of the Fall 2009 Contractors’ Research Council survey, co-sponsored by PWC: Painting & Wallcovering Contractor Magazine and KeyBanc Capital Markets.
The exclusive quarterly surveys of painting contractors nationwide track confidence levels, bidding activity and prices, product usage, labor practices and other market indicators.
The contractors’ optimism was echoed by Saul Ludwig, a KeyBanc Capital Markets’ financial analyst who tracks the paint and coatings industry.
“Optimism for a recovery in the housing market is getting stronger as the decline in housing prices is slowing and existing home sales increased in both June and July,” Ludwig said. The only lingering concern, Ludwig said, reflects uncertainty about the long-term effect of the federal stimulus program.
Ludwig’s reports on the industry in the last year have reflected its concern over its declines and challenges. Now he, too, is predicting a slow, but sure, comeback.
“We expect that 2010 will be a better year for the paint industry,” he said.
Another sign of recovery: Although bid activity for finishing contractors dipped slightly in the last quarter, reflecting the summer’s lighter workload, the steady slide in bid prices appears to have stabilized after more than a year, contractors reported.
The slow economy also apparently has spurred contractors to reach out for new ideas and products. About 44% of contractors in the CRC survey reported trying new products this year, with environmentally friendly (“green”) products leading the pack.
Benjamin Moore’s new products, especially its Aura and Natura paints, drew the most first-time contractor-buyers, followed closely by new products from Sherwin-Williams, the survey showed. Most respondents gave a thumbs-up to new products they tried, saying they would buy them again.
PWC: Painting & Wallcovering Contractor Magazine is the nation’s leading publication for finishing contractors of every sector. PWC is published by Technology Publishing Co. of Pittsburgh. Learn more at www.paintsquare.com.