Construction equipment manufacturers forecast continued business gains

Construction equipment manufacturers expect overall industry growth to continue through 2006, but at a somewhat slower pace than 2005, with gains predicted across U.S., Canadian and other worldwide markets, according to an annual business forecast conducted by the Association of Equipment Manufacturers (AEM).

Each year, the North-American based AEM trade group polls its construction equipment manufacturer members on anticipated industry-wide performance of this multibillion-dollar industry.

In AEM's latest "outlook" report, construction equipment business in the U.S. is anticipated to close on a strong note for 2005, with increases of 13.9 percent, followed by 2006 growth of 9.3 percent. For Canada, construction machinery sales are predicted to gain 13 percent by year-end 2005 and then increase 8 percent in 2006. The forecast for other worldwide markets is 8.4 percent growth for 2005, followed by 2006 gains of 9 percent.

The state of the overall U.S. economy is the leading factor which will affect growth, say construction machinery manufacturers as they look to 2006, including consumer confidence and interest rates levels, and their effect on housing starts.

The impact of the highway bill on future business is also a major factor cited by manufacturers participating in the AEM outlook survey, since the building and repair of highways, bridges and other public works is a significant component of overall construction activity. After almost two years of short-term extensions, Congress passed a bill that the President signed into law in August 2005, calling for total guaranteed funding of more than $286 billion dollars for highway and transit programs through fiscal year 2009.

Steel prices and availability have stabilized somewhat, but they still play a significant role in manufacturers' ability to build and sell equipment, say AEM outlook survey participants. They continue to face materials shortages, including steel, and higher commodity costs. The negative impact of these is a serious concern during this current expansion.

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