January construction equipment shipments from US factories were at the upper end of the $2.1-$2.3 billion a month range that has persisted for more than a year and is expected to continue into 2009. The expectation for steady shipments is the net of changers in domestic and export demand. Early in 2008, domestic demand will weaken during a period of weak economic growth, possibly a recession. But export demand to a still rapidly growing world economy continues to expand. Later in 2008 and during 2009 the trends reverse. Domestic equipment will increase modestly with the turnabout in the housing market while export demand will ebb as economic growth begins to slow outside of the US, especially in Asia.

Prices for construction equipment jumped 0.5% in January after three months of little change. Expect more price increases in the coming months due both to the continued decline of the $US and a 15% rise in steel prices which has already begun.

Caution: Equipment market data may be volatile in the next few months with possible large revisions because it is difficult to accurately seasonally adjust market data around the CONEXPO show which does not occur every year.

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