Sales and lease of new construction equipment in the United States were up 7.8 percent through the first eight months of 2016, the highest level since 2007, according to market analyst EDA. Sales of used equipment were up a modest 1.7 percent through August 2016. EDA tracks machine sales that are financed, by monitoring Uniform Commercial Code lien filings. The figures don’t include cash sales, but are considered a solid indicator of economic activity.
“These numbers are encouraging as we head into the last quarter of 2016,” said Tim Frank, president of IronDirect. “We know there is demand for new equipment, but buyers are also cautious. This is why the IronDirect platform and its many money-saving features are so valuable at times like this.”
According to EDA, there were 73,319 new units sold in the first eight months of 2016, the highest year-to-date level since 2007, when 85,336 units were sold in the same period. The sales and lease figure for 2016 is 260 percent higher than during the deepest part of the equipment recession in 2010. Prior to that, sales of new construction equipment boomed in 2007 with 122,497 machines sold. Then the recession knocked the equipment economy on its back with three successive years of major losses. Between 2007 and 2010 there was a 73 percent drop in new construction equipment sales. There have been steady gains ever since, but sales in 2015 were still 15 percent below the boom year of 2007.
The EDA figures represent a bright spot in a patchwork of mixed economic news heading into the fourth quarter of 2016. U.S. construction spending for the first eight months of the year was up 4.9 percent from the same period in 2015, the U.S. Census Bureau reported. Construction employment was up 3.4 percent in September, although contractors continue to report serious problems finding qualified workers.
Even with that positive news, there is apprehension in the construction economy. Materials prices are rising, which is causing contractors to have less confidence in business prospects for the next six months. A recent survey of economists by The Wall Street Journal found 60 percent believe there will be a recession in the next four years. The World Trade Organization recently revised downward its growth forecast for 2016 and 2017, now expecting the slowest pace of trade and output growth since 2009.
The Equipment Leasing & Finance Association expects investment in equipment and software to be flat or slightly down (-0.5%) for 2016. The group predicts U.S. gross domestic product (GDP) growth for 2016 to end up at a meager 1.6 percent. ELFA previously forecast equipment and software investment would be up nearly 1 percent for 2016, but its revised forecast calls for slight contraction. The group’s monthly leasing and finance index shows new business volume is down 6 percent for the first eight months of 2016.
Frank said IronDirect offers equipment buyers a strong hedge against economic uncertainty. “Our value-priced equipment brands can save contractors 25 percent to 40 percent off the purchase cost compared with big-brand equipment,” Frank said. “Our outstanding warranty, Service Your Way™ program and management tools like DirecTrac™ telematics will make sure that equipment has maximum uptime. Our platform is what buyers need to stay on top of the industry and ahead of economic trends.”
Joe Hanneman, Director of Industry Engagement for IronDirect.