The short-term outlooks for equipment manufacturing and the agriculture and construction customers they serve remain somewhat uncertain, but slow growth is on the horizon, according to data presented at AEM’s Q2 Equipment Market Outlook Webinar.
While supply chain disruptions stemming from the COVID-19 pandemic and global conflicts have inhibited growth in recent years, there are some bright points for both the ag and construction markets. The North American construction market should remain more subdued in 2024 when compared to 2023, in terms of total industry growth, through a few markets will see growth.
On the ag side, lower commodity prices, high storage and farm input costs contributed to lower margins for farmers. In addition, elevated ag equipment prices and loss of U.S. market share in the global market signal a slowing demand for farm machinery and related attachments and components. However, with inflation no longer on the rise and supply-driven pricing pressures easing, the consensus opinion, as reflected in AEM’s most recent Industry Condition Survey, is that economic recovery of the industry and its supply chain is much closer than previously 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 Tom Hogood, economist, Construction at GlobalData:
Ag
- There is an overall sense of pessimism for ag equipment demand growth amongst AEM members who completed our most recent survey.
- Inventory levels are rising for both manufacturers and dealers.
- Irrigation and sprayers, loaders and material handlers, and trailers and transportation equipment are seeing rising levels of demand, while equipment for soil working, seeding, fertilizing, and plant protection are seeing decreasing levels of demand.
- Excess supply of major ag commodities, sticky input prices, dwindling government support, and struggling exports all resulted in the steepest drop in net farm income, a major predictor of farm equipment demand. Year-to-date sales of ag equipment are lower year-over-year, marking, conceivably, a second consecutive year of lower demand.
Construction
- There is an overall sense of cautious optimism for CE equipment growth amongst AEM members who completed our most recent survey.
- Key challenges in the industry in 2024 include high interest rates, labor shortages, geopolitical risks, and projected weaker demand growth in both developed and emerging economies.
- The energy and utilities sector, as well as the infrastructure sector, are the main industry drivers of growth, stemming from government investment.
- The drive toward net-zero emissions by 2050 will present the industry with a significant growth opportunity.
2023 was a shaky year for both the U.S. and global economies, which negatively impacted AEM members along with the ag and construction markets. 2024 will continue to present AEM members and underlying markets with demand-driven challenges. Our members are therefore encouraged to plan their businesses accordingly.
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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