AEM Predicts High Hopes For The U.S. Construction Industry

With the increasing demand for infrastructure work, we can see the construction industry embracing the change. The increased interest rates, material costs, and fuel costs are big challenges for global construction companies. However, market analysts believe that these challenges may open new doors of opportunities for heavy equipment manufacturers, contractors, and traders.

AEM members report demand for products across both industries has softened as of late. However, particularly in construction, investments in infrastructure, energy, and utilities point to better days ahead. And, perhaps more importantly, our latest data suggests optimism – both in the short term and long term – is (and should be) prevalent.

According to the recent report of the Association of Equipment Manufacturers (AEM), the product demand is increasing. Having said that, the construction and infrastructure sector in particular is heading towards widened horizons shortly.

The association of equipment manufacturers works actively to find and release economic trends globally and how the construction sector can adopt those. However, in the latest survey of AEM, the respondents from different construction sectors showed distress in the supply chain department. Paralley, many of the contractors find the developing need for infrastructure a bit overwhelming.

The Current Key Influencing Factors Of The Construction Industry

According to lead economist at Global Data, Danny Richards, here are the key driving factors that are influencing heavy equipment suppliers, manufacturers, and distributors globally.

Due to high inflation and lack of material, the global construction market witnessed lesser output in 2022. However, the central bank minimizes high interest ratios for contractors to lower the over-the-head inflation rate.

It has resulted in lowering the high-priced materials, heavy equipment, and fuel to bearable levels. The significant change in lowered prices occurred in the second half of 2022.

The main driving forces will be the investment in the energy, infrastructure, and utilities sectors. However, infrastructure investments will be the key factor as per the growth of the Investment Infrastructure and Jobs Act in the U.S. A shift in energy-efficient construction processes with fuel-saving heavy construction equipment will further boost the entire construction industry.

The construction industry is at the elevated trajectory of $3.6 billion through diverse forms of construction work. Regardless of the shirt output and barriers, the construction sector is still showing optimistic probability as per the upcoming years.

The United States has proven to be the most contributing region in the growth of the construction sector after the pandemic. Still, the sharp drop in infrastructure work with the declined residential sector dropped the market in 2022.

As the globe stepped in 2023, an increase in commercial and residential projects in the U.S. took place after the relief by the U.S. job provision sector mitigating the downfall the construction sector faced in previous years.

The data collected by AEM shows an affirmative response as the CE index is aligned with the average indexes. The retention issues of the workforce and supply chain have become weak against the high hopes and efforts of heavy equipment manufacturers.

Role Of North American Heavy Construction Market

The most promising region that has elevated the construction industry growth is the North American region. North America was the biggest market back in 2022 with an 8% sales increment of heavy equipment machinery sold. A total of 310,000 heavy equipment were marked sold due to the high consumer demand.

Although interest rate rises are having a cooling effect on the booming residential market, which drove compact equipment sales in the last two to three years, the shortfall of housing in the region means this sector is still strong.

According to AEM, the sales may see a slight drop but will continue to witness second-highest volumes in the coming time. Moreover, the construction sector is shifting towards booming residential areas and other infrastructure work.

The Future Ahead

In conclusion, the construction industry is in a revolutionary state. With increasing time, construction trends are also evolving, giving more opportunities to heavy equipment suppliers.

Both the manufacturers and contractors need to work hard to sustain the changes and grow their businesses financially at sustainable levels.