The deepened recession did not reach construction equipment shipment by October but will arrive by the end of the year. October shipments were on track with the reasonably steady level recorded for more than a year. However equipment orders fell 26% in October. While orders are always volatile, this probably signals an imminent drop in shipments. This is consistent with the 15% drop in construction equipment production in the US in October which held in November. It is also consistent with recent reports of falling used equipment prices and modestly declining equipment rental rates.

Equipment shipments are forecast to decrease nearly 20% from October 2008 through late 2010. The forecast assumes only a small boost in heavy construction funding from the expected 2009 economic stimulus program. The massive program being suggested to the new administration and new congress by construction industry and regional government lobbyists would halt the slide in construction equipment shipments by the end of 2009.

US Equipment Market – December 2008

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