Q4 Ag and Construction Market Update: Construction Growth on the Horizon while Agricultural Growth Remains Under Pressure

According to AEM's recent Q4 Equipment Market Update Webinar, the short-term outlooks for equipment manufacturing and the agricultureand constructioncustomers they serve remain somewhatuncertaindue to the recent electionamong other factors, however growth could be on the horizon.

While there is some uncertainty in the air as a result of the recent election, there are bright points appearing for both the agand construction markets.Today's world construction market is characterized by easing inflation and declining interest rates, allowing constructiongrowthto start picking up again.

On the ag side, rising inventory levels and weakened demand are turning up the pressure for equipment manufacturers, however this may ease in the near future as the average fleet age nears maturity.

With that in mind, here are some takeaways from AEM's final Equipment Market Update Webinar of the year, which featured expert perspectives from AEM's Al Melhim, senior director of business intelligence, and Tom Hogood, economist, construction at GlobalData:

Ag

• The U.S. ag equipment market is in recessionary mode, seeing slower sales, rising inventory levels, uncertain outlook, and reduction in capital investment and employment.

• The used equipment market is showing cracks, new equipment year-to-date sales have dropped in 2024, and inventory is sitting at an uncomfortably high level.

• The U.S. farm economy is most likely headedfor another year of weak returns, as supply surpasses demand.

• Pent up demand could increase salesin 2025 as interest rates drop.

• Due to the cyclical nature of equipment sales, as the average fleet age matures equipment sales are expected to increase in the next one to three years.

Construction

• Construction growth is expected as a result of slowing inflation across the world construction market, and as interest rates start to decline.

• The energy and utility sector and the infrastructuresectors are key drivers of growth across theglobalindustry, stemming from growing net-zero goals and government investment, while the residential sector is slightly lagging.

• The future is somewhat uncertain as a result ofthe recent election,but most experts are expecting a focus on deregulation, promoting construction activityand enablinginfrastructure growth.

While the ag industry is expected to head into another difficult yearas the farm economy continues to struggle,pent up demand may spur sales in the next year or two. On the construction side, it appears that construction growthis on the horizon, as the market becomes increasingly favorable due to decreased interest rates and deregulation.

Learn More

In addition to its quarterly Equipment Market Update Webinars, AEM continues to offer a wide range of other market data products. For more information, contact your Account Success Advisor.

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