Posted on April - 17 - 2011
Construction Equipment Shipments Inch Higher in February
The construction equipment sales boom continues. Shipments from US factories rose 1.3% in February. Orders dipped sharply but remain in line with sales. However, manufacturers’ inventories inched up and their inventory/sales ratio remains stubbornly above the target level. The sales surge is being driven by both higher exports and rebuilding rental fleets for higher construction activity ahead. Shipments will remain strong and continuing expanding but the growth pace will drop from the recent 50% plus annual pace to less than 10%.
The construction equipment price index rose 0.2% in February to 2.2% above a year ago but rental rates plunged 2.6% after being largely unchanged over the past year. Higher inflation across the economy will keep upward pressure on equipment prices in 2011. The underlying price trend is no change for a few more months then prices will begin to rise very modestly with a stronger economy and construction market. 4% world GDP growth and resumed $US depreciation will push equipment price inflation as high as 4% late in 2012.
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