Construction equipment shipments by US manufacturers slipped slightly in the last two months but remain in the narrow range about $2.3 billion per month where they have been stuck for more than a year. Increasingly, rising export sales are replacing sagging domestic sales. Over the past year, export sales increased 18.5% (import sales declined 8.3%) while domestic sales dropped 12.3%. Weakening domestic sales have limited equipment price increases to 2.9%, probably less than manufacturers’ cost increases, and forced a 0.7% drop in equipment rental rates.

Equipment sales are expected to be steady through next year. Initially, rising exports will offset falling domestic sales. But the trends reverse sometime next year. Export growth will slow, perhaps end, when the exchange value of the $US has risen 6-10% over a year and the economic slowdown that began in the US reaches developing countries and cuts demand for capital equipment. At about, the same time, the two year plus slump in domestic construction equipment sales will end when the volume of construction spending has been rising for several quarters and rental services began to replace the hufge amount of equipment they bought in 2005-06.

US Equipment Market – Aug 2008

Data Sources: US Department of Commerce and US Department of Labor
Table: Reed Construction Data