Slowdown or a pause for breath?
29 June 2023
While recent statistics show a slowdown in construction equipment sales in May, it would be unwise to jump to conclusions about a long-term decline.
Figures from the construction equipment statistics exchange is run by Systematics International in partnership with the Construction Equipment Association (CEA), show that retail sales of machinery were 5 per cent below May 2022 levels. However, this took sales in the first five months of 2023 to 15,900 units, which is nearly 6 per cent above the levels seen in the same period last year
The CEA expects further modest reductions in the second half of the year in anticipation that overall sales of equipment this year will fall behind 2022 levels.
The reduction is surely not surprising given the pace of growth in the wake of Covid-19. Indeed, back in October 2021 the blog reported how some hirers were experiencing record levels of fleet utilisation owing to demand and supply chain difficulties. Workshops were run ragged getting off-hired equipment back out on hire to waiting customers as fast as possible.
Suppliers couldn’t cope with demand and many manufacturers are still playing catchup because of component shortages. Availability of engines of virtually all types and sizes has also been an issue, and some hirers tell me they have machines on order with no firm delivery date.
So there may be more factors behind the sales equipment slowdown than simply suspecting a wider economic downturn. It could be that the market is still trying to pause for breath.
And another positive to focus on is that if equipment is in short supply, there should be less pressure from customers on hire rates and an appreciation of availability.
Getting back to the CEA statistics for the five months to May this year, wheeled loaders are showing the strongest growth at 15 per cent above 2022 levels. Road rollers showed the strongest growth after four months, but mini and midi excavators experienced only a modest increase of only 3 per cent growth compared with last year. But perhaps this is due to issues of availability rather than demand.
So while there are certainly wider economic challenges like rising inflation and higher interest rates, what we might be seeing is a correction towards normality.
