The Association of Equipment Manufacturers (AEM) surveyed its members regarding their thoughts on various economic trends and how they are affecting their efforts to do business, both within the U.S. and abroad.
Most respondents say they are still experiencing supply chain issues, with many saying that conditions continue to worsen, AEM says.
“Nearly all respondents still face supply chain issues with more than half experiencing continuously worsening supply chain conditions,” says Kip Eideberg, senior vice president of government and industry relations at AEM. “The two driving factors that we hear are the current supply chain disruptions and the workforce shortages.”
The ongoing challenges of high interest rates, as well as energy and material prices, have plagued the construction industry, but hope is on the horizon for these issues, as well as others, to eventually be resolved, AEM says.
Some of the driving forces and key points from AEM’s Q1 webinar regarding what equipment manufacturers in the construction industry will be facing for the remainder of this year, according to presenter Danny Richards, lead economist for construction at Global Data include:
• Global construction output growth slowed in 2022 and is to remain sluggish in 2023.Interest rates remain high and could rise further in the first half of this year before central banks bring an end to this tightening cycle, assuming inflation starts to fall, according to Richards. Energy and construction material prices also remain high, although some have fallen from the peaks of the second quarter of last year.
• Investment in infrastructure, as well as in energy and utilities, will be driving forces for growth. As the Infrastructure Investment and Jobs Act in the U.S. gathers momentum, investment in infrastructure will be a driving force for growth. Energy and utilities will also provide a boost to overall construction activity, Richards says, with renewable energy projects remaining a key investment focus.
• The industry is optimistic as it tracks $3.6 billion in projects across multiple sectors. Despite a relatively weak short-term outlook for construction output, Richards says there is still a sizeable pipeline of opportunities on the horizon over the next several years.
• The decline in construction output is expected to slow in 2023. The U.S. was one of the few markets to register positive growth in 2020 and 2021. However, driven largely by intense inflationary pressure and a slowing residential sector, output dropped sharply in 2022. Despite the deeper-than-expected decline in the residential market remaining a risk to overall growth, there has been an improvement in non-residential sectors according to Richards.
The data shows AEM construction equipment indexes are in line with the average indexes. And, despite supply chain and workforce retention issues, AEM says many equipment manufacturers are hopeful for eventual resolutions to these ongoing issues plaguing the industry.