HARD DATA UK Construction equipment sales – 2022 beats 2021

The CEA’s Market Analyst, Paul Lyons, provides his insight into what is happening in and around the construction equipment market …

Retail sales of construction and earthmoving equipment showed very strong growth at the end of 2022. Sales in Q4 were 20% above the same quarter in 2021, and as a result, sales for the full year were just under 3% above 2021 levels, reaching 37,400 units. As a result, 2022 saw equipment sales at “record” high levels. By exceeding 2021 numbers, which were higher than the peaks reached in 2018 and 2019, they became the highest annual sales since before the financial crash in 2008.

The pattern of sales in the UK last year saw a weak first half due to supply chain constraints which impacted on machine production as well as the import of equipment from overseas. However, as highlighted above, sales in the second half of the year were very strong, with clear signs of supply chain issues improving in the last quarter. Sales in the early months of 2023 should benefit from the ongoing catch-up effect, as lead times for supply of equipment continue to return to a more normal pattern.

An additional feature in the construction equipment statistics scheme run by Systematics International has been the recording of machine sales by engine type, including sales of electric powered equipment. For 2022, this shows that sales of electric powered machines were double the level of sales in 2021. While this illustrates the progress that is being made to decarbonise within the sector, annual sales of electric powered equipment are still in the hundreds and highlights the need for more investment in charging infrastructure and the need for further development and promotion of electric power within the industry.

The pattern of sales for the major equipment types provided quite a mix of performances in 2022. Telehandlers (for the construction industry) showed the highest sales last year, at 15% above 2021. In contrast, sales of Wheeled loaders were the weakest, ending up at 3.5% below 2021’s figures. Sales of the two most popular equipment types, Mini/Midi excavators and Crawler excavators saw sales fairly similar to 2021. Crawler excavators ended up at just under 3% above the previous year and the most popular product, Mini/Midi excavators, saw sales matching 2021.

In their most recent forecast, Off-Highway Research are anticipating that sales of construction equipment will show a fall of 7% this year as the impact of reduced activity in the construction market is experienced. The high level of uncertainty from the ongoing war in the

Ukraine is expected to result in a weaker economic climate and lower levels of investment. Combined with the effects of higher costs for materials and energy, activity in the construction sector is expected to decline by close to 5% in 2023, as forecast by the Construction Products Association (CPA).

Construction equipment sales in the Republic of Ireland are also recorded in the statistics scheme run by Systematics International. Sales in 2022 were disappointing compared with the UK and ended up at 8% below 2021 levels, reaching 1,800 units. Sales in the last three quarters of the year all saw declines compared with 2021.

The UK construction Purchasing Managers Index (PMI) published by IHS Markit is a good indicator of current prospects within the UK construction industry. The latest update for January is shown in the chart below and indicates that the index is continuing to decline in recent months, with the last two months falling below the 50.0 “no change” level. The latest survey in January indicated that new orders are declining across the industry and housebuilding is currently the weakest sector. Rising interest rates and unfavourable economic conditions are being identified as factors impacting on housing demand.

Construction Output Is Forecast To Decline In 2023

The latest figures from the Office for National Statistics (ONS) show that growth in construction output was slowing down in 2022 with growth at 5.6%. This followed growth of just under 13% in 2021, following the recovery from the pandemic. The quarterly pattern of output last year provides a clear indication of the current market situation, with output being virtually flat across the last three quarters of the year, following strong growth in Q1. The statistics on new orders for construction show a declining situation. While achieving modest growth of 1.2% for 2022 overall, orders at the end of the year were on a downward path, with Q4 showing a 4.3% decline compared with the previous quarter.

The Construction Products Association (CPA) published their Winter forecast for the UK construction market at the end of January. This latest update anticipates a decline of 4.7% in construction output in 2023, more severe than the Autumn forecast which indicated a 3.9% downturn. Private housebuilding is identified as the worst effected sector this year, both in terms of new building and repair and maintenance activity. Falls in activity in these areas are expected to be partially offset by continued growth in infrastructure, which is already at historically high levels of activity. This sector has benefitted from multi-billion pound projects such as HS2, the Thames Tideway Tunnel and Hinkley Point C as well as long-term frameworks activity in sub-sectors such as rail, roads and energy. Going forward, further growth in infrastructure output is expected but it is likely to be slower than in previous years due to cost inflation and financial constraints. The forecast for 2024 is for construction output to stabilise and show modest growth of 0.6% compared with 2023.

https://www.constructionproducts.org.uk/