The CEA’s Market Analyst, Paul Lyons, provides his insight into what is happening in and around the construction equipment market …
UK Construction equipment sales grew by 1% in Q4 compared with 2019
Retail sales of construction and earthmoving equipment continued to show a strong recovery at the end of 2020. Sales in December were 15% ahead of December 2019 levels, and this was sufficient to push Q4 sales to 1% above the same quarter in 2019, as shown in the chart below. Construction activity continued to recover in the second half of the year, and this supported improving demand for equipment sales.
In 2020 overall, sales of construction equipment ended up 24.5% below 2019 levels at just over 24,000 units for the year. While this is still a significant year-on-year decline due to Covid-19, it is less than feared earlier in the year when sales declined by 38% in the first half of the year, following the initial crash in March due to the pandemic.
A distinctive feature of equipment sales in 2020 was the strength of sales of the most popular equipment type, mini/midi excavators (under 10 tonnes). Sales of these products only showed a 5.5% shortfall compared with 2019, while all the other major equipment types showed declines of between 28% and 57%. Strong demand from the house building market is reported to have been one of the key factors boosting demand for smaller machines last year.
The construction equipment statistics exchange also covers retail sales of equipment in the Republic of Ireland. After recovering in the second half of the year, sales showed only a 14% decline on 2019 levels for the full year. Similar to the UK, mini/midi excavators were the best performing equipment type.
The construction industry continues to recover
The UK construction Purchasing Managers Index (PMI) published by IHS Markit is a good indicator of sentiment within the UK construction industry. The latest update for December is shown below, and indicates continued recovery at 54.6, a similar level to November. This was the seventh consecutive month for the index above the 50.0 growth level, since the crash due to the Covid pandemic earlier in the year.
Housing building remains the best performing sector, and reached a level of 61.9 in December. Civil engineering remained the weakest at 48.0, and this was the fourth time in the last five months that this sector has recorded falling activity.
The Construction Products Association (CPA) published their latest forecast for the UK construction market in January. This anticipates a 14% increase in construction output this year, which matches the level of decline in output in 2020. This means that a recovery in output above 2020 levels won’t be seen until 2022, when a further increase in output of just under 5% is forecast. https://www.constructionproducts.org.uk/