Global construction equipment sales are set to experience a steeper decline than initially projected this year, according to the latest forecasts from Off-Highway Research. Persistently high interest rates worldwide are the primary factor, stalling homebuilding and making equipment financing more costly.
Central banks have started to respond to the economic slowdown. The Federal Reserve made its first interest rate cut in four years in September, lowering borrowing costs by 0.5%. Similarly, the European Central Bank has enacted two 0.25% cuts this year, and the Bank of England lowered rates by 0.25% in August. However, Off-Highway Research suggests these reductions may be too late to significantly boost the European market, where construction equipment sales are expected to fall by 14%.
North America’s equipment market is forecasted to shrink by 10%, consistent with earlier predictions. However, the region shows resilience in homebuilding, with a gradual recovery in building permits, especially for single-family homes, balancing out declines in multi-family projects.
Globally, other regions are showing mixed results. While South America is expected to see slight growth, the Chinese market may stabilize rather than continue to decline, and India’s market was less affected by the recent general election than anticipated. Conversely, Japan’s outlook was downgraded slightly, with sales expected to plateau instead of grow.
Overall, global equipment sales are now expected to fall by 10%, a slight downgrade from the previously anticipated 9% decline. Although these reductions follow the record sales of the pandemic years, they signal a downturn in the industry. Off-Highway Research anticipates that the global market could bottom out in late 2024 or early 2025, with growth returning next year—contingent on further rate cuts by central banks.
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