While the U.S. and global economies have continued to grow, the pace has slowed over the second half of 2021.
But in the construction and agriculture equipment industries, stronger-than-expected growth this year has many manufacturers feeling optimistic about 2022.
According to results from AEM’s fall member survey, more than 80% of AEM members anticipate rising demand for construction and agriculture equipment over the next year. Furthermore, roughly 65% think demand for ag equipment will be above normal, while 44% think demand for construction equipment will be above normal.
Manufacturers are facing some headwinds, though. More than 80% of AEM members are having a difficult time filling manufacturing positions. Roughly 95% are being affected by supply chain issues. Widespread inflation is driving up prices for raw materials and other manufacturing inputs, as well as the finished products manufacturers send to market.
Despite all of these challenges, AEM members remain optimistic. Roughly 58% in the construction segment and 44% in the agriculture segment think the global economy will recover within the next year. Roughly 70-74% think the U.S. economy will recover within the next year, and 75-80% think their individual companies will recover in a year.
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Construction Industry Outlook
Construction spending is up 1.1% this year. Spending should improve next year, with 2.7% growth in the forecast. If that plays out, construction spending in 2022 will surpass 2019, which was a banner year for the industry.
The construction pipeline, especially on the residential side, remains strong. The total construction pipeline has $464 billion currently under construction, $742.71 billion in pre-tender, $33.65 billion in tender, and $28.28 billion in the award/financing stage. Another $233 billion has been delayed or canceled, largely due to labor and materials shortages.
On the non-residential side, power plants and grids have seen the most investment (30%) followed by roads and bridges (17%).
“The American Jobs Plan will give a big boost to spending on infrastructure,” said AEM Director of Market Intelligence Benjamin Duyck. “The biggest impacts will be in 2022 and 2023.”
AEM members remain quite optimistic about the CE segment, although attitudes have cooled a bit since this time last year. Nonetheless, roughly 75% of AEM members saw a jump in new orders of construction equipment in Q3. At the same time, 80% saw an increase in backlog. Roughly 42% have been able to increase production, while another 42% have maintained.
With respect to construction components and attachments, 96% saw an increase in new orders while 90% watched their backlogs increase. More manufacturers (83%) have been able to increase production, however, than those on the wholegoods side.
“Demand for every construction equipment category remains green,” Duyck said.
That said, AEM members are expecting more mild growth in most categories over the next 12 months, which could be due to the fact that performance this year was much stronger than expected.
The latest data shows that machinery for mining and construction in the U.S. should finish this year with a 17.5% increase. Looking forward, 7.7% growth is expected next year, followed by 5.4% in 2023.
On a global level, Brazil has seen the most growth this year (44.8%) followed by China (24.3%), Japan (24.2%), the United Kingdom (20.7%) and India (19.4%). Looking ahead to 2022, India is expected to see the most growth (12.4%), followed by the United Kingdom (9.3%).
Agriculture Industry Outlook
American farmers are in a strong position …….