2024 Agriculture and Construction Outlook Register an Uneven Present and Uncertain Future

When it comes to the short-term economic outlook for equipment manufacturing and the agriculture and construction industries they serve, the only thing anyone can honestly say for certain is there are no certainties. 2023 has been a difficult year for the economy as a whole, and the vast majority of economic indicators suggest growth is not on the horizon for AEM, its members and the ag and construction markets. However, none of the data suggests significantly darker days ahead.

It’s easy to look back at what’s transpired to equipment manufacturers and their customer since the onset of the COVID-19 three-plus years ago with the benefit of hindsight. The pandemic’s impact, along with various other shocks and strains, drove the market to where it is today.

Certain statistics and data points reveal an uneven present and point to an unsettled future, including:

  • The construction industry has experienced contraction of about 3% this year.
  • Construction prices dropped by more than 6% last year and are projected to see a further decline of about 3% this year.
  • The U.S. Department of Agriculture forecasts lower cash receipts across most agricultural products.
  • The U.S. Fed in October chose to keep interest rates on hold at a 22-year-high, reflecting ongoing concerns about inflation.

While the near-term outlook should serve as a slight cause for concern, there is data that offers some hope for improvement:

  • The passage of the Infrastructure, Investment and Jobs Act – and, perhaps more specifically, spending coming from it – is leading to notable growth in both the infrastructure and energy and utilities sectors after significant weakness in recent years.
  • Signs of life are being seen in both the commercial and institutional sectors, but that’s coming on the heels of a few very weak years.
  • Construction materials prices are coming down, albeit from very high peaks.
  • Construction activity overall is set to improve overall in 2024, but mostly in certain areas (industrial, infrastructure and energy, in particular).

While AEM members have reported demand for products across the industries they serve has softened as of late, investments in infrastructure, energy and utilities point to better days ahead for construction over the long term. For ag, however, operational costs for farmers remain a concern, while mixed results related to tractor and combine sales reflect ongoing short-term uncertainties. However, continues sales strength in larger equipment markets offer a glimmer of hope regarding long-term gains.

Source: AEM