September 2023 Equipment Market Outlook

Flat U.S. construction machinery orders paired with elevated interest rates and slowing economic activity will likely hinder demand for construction and related machinery purchases in the coming quarter.

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Industry-leading economic firm ITR Economics provides heavy-duty equipment market trends to help OEMs stay up to date on top industry information and insights, which can help them make better decisions during 2023.

In our continued analysis, this month’s data shows U.S. construction machinery orders have been flat for much of the last year, and as elevated interest rates and slowing economic activity continue, this will likely hinder demand for construction and related machinery purchases in the coming quarters and instead favor rentals. Meanwhile, Europe's agricultural and forestry machinery production was up more than 11% over last year's levels, although likely headed for a slowdown later this year.

The following provides a summary of key observations across 13 indicators and areas of industry that contribute to today's global economic conditions.

NOTE: All data for charts are supplied by ITR Economics.

US OECD Leading Indicator

  • The monthly rate-of-change for the U.S. OECD Leading Indicator continued to rise in July.
  • Taken alone, this would suggest cyclical rise in U.S. Industrial Production late this year and in early 2024. However, numerous economic headwinds signal that the return to cyclical rise in the industrial sector is more likely to occur later than suggested by the OECD Leading Indicator. 

US OECD Leading IndicatorUS OECD Leading IndicatorITR Economics

Four Big European Nations Leading Indicator

  • The Four Big European Nations Leading Indicator monthly rate-of-change rose in July. This could suggest imminent growth-rate rise for EU Industrial Production; however, this is not the case. The Production quarterly average recently dropped below year-ago levels.
  • Tightening monetary conditions suggest further downside pressure on the European economy. 

Big Four European Leading IndicatorBig Four European Leading IndicatorITR Economics

US Construction Machinery New Orders

  • Annual U.S. Construction Machinery New Orders totaled $47.9 billion in June. The New Orders annual growth rate, at 12.8%, has been trending generally flat for much of the last year.
  • Elevated interest rates and slowing economic activity will likely hinder demand for construction and related machinery purchases in the coming quarters and instead favor rentals. 

U.S. Construction Machinery New OrdersU.S. Construction Machinery New OrdersITR Economics

 US Mining & Oil Field Machinery Production Index

  • Annual U.S. Mining and Oil Field Machinery Production declined for a second consecutive month in July. The annual average is up 4.8% from one year prior.
  • U.S. Crude Oil Futures Prices have generally oscillated in the $70 to $80 per-barrel range since late 2022. Stagnant prices and elevated interest rates may hinder investment in equipment. 

U.S. Mining & Oil Field Machinery Production IndexU.S. Mining & Oil Field Machinery Production IndexITR Economics

US Industrial Production

  • U.S. Industrial Production in the three months through July was 0.4% below the year-ago level.
  • Tightening monetary policy and the yield curve inversion signal further quarters of downward movement in the industrial sector.

U.S. Industrial ProductionU.S. Industrial ProductionITR Economics

US Farm Machinery & Equipment Shipments

  • U.S. Farm Machinery and Equipment Shipments in the 12 months through June were 15.5% below the year-ago level.
  • The U.S. Farm Product Raw Materials Wholesale Inventory/Sales Ratio suggests we could see rate-of-change rise in Shipments starting around the end of this year. However, elevated interest rates remain a hindrance.  

U.S. Farm Machinery and Equipment SuppliesU.S. Farm Machinery and Equipment SuppliesITR Economics

US Heavy-Duty Truck Production

  • Annual U.S. Heavy-Duty Truck Production rose in July, coming in 13.1% higher than the year-ago level.
  • Growth will slow in the coming months, with downward pressure likely culminating in contraction beginning around year-end 2023, given headwinds in both the macroeconomy and the freight industry.  

U.S. Heavy-Duty Truck ProductionU.S. Heavy-Duty Truck ProductionITR Economics

US Defense Capital Goods New Orders

  • Annual U.S. Defense Capital Goods New Orders in June totaled $168.3 billion, 20.2% above the year-ago level. Growth is accelerating.
  • Annual New Orders will likely continue to rise into at least early 2024, given heightened geopolitical tensions and the defense budget of the U.S. 

U.S. Defense Capital Goods New OrdersU.S. Defense Capital Goods New OrdersITR Economics

US Private Nonresidential New Construction

  • U.S. Private Nonresidential Construction spending in the second quarter totaled $166.3 billion, up 20.8% from the second quarter of 2022.
  • Declining corporate profits, slowing retail spending, and elevated interest rates will likely negatively impact investment in new construction, though this effect is usually lagged. Slowing growth is likely in the near term. 

U.S. Private Nonresidential New ConstructionU.S. Private Nonresidential New ConstructionITR Economics

US Total Public Construction

  • Annual U.S. Total Public Construction in June came in at $397.2 billion, 10.1% above the same period one year ago. The annual growth rate will likely rise further in at least the near term.
  • Slowing growth in State and Local Tax Receipts suggests downside pressure on Construction. Federal infrastructure spending is an upside. 

U.S. Total Public New ConstructionU.S. Total Public New ConstructionITR Economics

US Mining Production

  • Annual U.S. Mining Production activity in July was 6.5% higher than one year prior. Rise is being driven by the oil and gas segment.
  • Demand for mined materials will likely soften, given U.S. Manufacturing Production is declining and will likely continue to move lower in at least the coming quarters. 

U.S. Mining ProductionU.S. Mining ProductionITR Economics

Germany Industrial Production

  • Germany Industrial Production in the second quarter was 1.2% below the second quarter of 2022.
  • Further mild decline is likely in at least the near term as the global economy moves along the back side of the business cycle, impacting demand for German exports. 

Germany Industrial ProductionGermany Industrial ProductionITR Economics

Europe Agricultural & Forestry Machinery Production

  • Annual Europe Agricultural and Forestry Machinery Production in June was 11.2% above the year-ago level.
  • The quarterly growth rate is moving lower, currently at 6.8%, signaling a likely transition to slowing growth for the annual trend ahead. 

Europe Agriculture Machinery ProductionEurope Agriculture Machinery ProductionITR Economics