Ag and Construction Market Outlook: Short-Term Growth Proves Elusive

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2/16/2024

Ag and Construction Market OutlookThe short-term outlooks for equipment manufacturing and the agriculture and construction customers they serve remain mixed, but expectations for long-term growth are increasingly positive, according to data presented at AEM’s Q1 Equipment Market Outlook Webinar earlier this month.

Supply chain disruptions in the wake of the COVID-19 pandemic and the Russia-Ukraine war hampered growth in recent years, but several signs suggest brighter days are ahead. Overall, North America should remain sluggish in terms of total construction industry growth in 2024. Meanwhile, on the ag side, various macroeconomic, climate, and geopolitical factors weakened global trade and negatively impacted demand. However, with inflation no longer on the rise and pricing pressures easing, the consensus opinion is long-term gains are expected.

With that in mind, here are some more takeaways from AEM’s recently held webinar (which featured expert perspectives from AEM Senior Director of Business intelligence Al Melhim and GlobalData Lead Economist Danny Richards):

Ag

  • Prices of measured ag commodities continue to trend downward in 2024, much as they did in 2023.
  • Supply is rebounding, outpacing demand and softening prices.
  • Macroeconomic, climate, and geopolitical factors disrupted global trade and added extra cost to end consumers’ wallets negatively impacting demand.
  • Lower farm net income negatively impacted lower-HP tractor sales.
  • The farm sector remains profitable and financially resilient.
  • El Niño and the ongoing push towards renewable biodiesel and sustainable aviation fuel paint a bullish outlook for ag’s medium and long-term future in the United States.

Construction

  • The ongoing weakness in construction will be driven mainly by a downturn in the residential sector, while interest rate movements will be critical in the future.
  • Construction price pressures are easing, but prices remain at an elevated level.
  • Potential exists for growth in construction. Most non-residential sectors continue to pick up, and industrial is emerging as a stand-out performer.
  • The Infrastructure and power/utilities sectors remain key areas of growth.

2023 was an uneven year for both the U.S. and global economies, which negatively impacted AEM members and the ag and construction markets. However, with more and more economic indicators pointing in the right direction as 2024 gets underway, it’s not unreasonable to suggest the worst of the economic turbulence is in the past.

Learn More

In addition to its quarterly Equipment Market Outlook Webinars, AEM continues to offer a wide range of other market data products. For more information, contact your Account Success Advisor.

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