Will fall be cool for the heavy equipment market?

With half the country sweltering under a heat wave, it’s only apropos to look forward to a cool
fall. But will fall be cool for the heavy equipment market? What has the first six months of 2023
taught us about what might be coming for used equipment values this fall?

In EquipmentWatch’s latest Market Report, construction equipment values have stalled on both
the resale and auction channels. While at first it appeared to be a summer slowdown, there are
indications that the construction pause might extend longer than initially anticipated. The latest
Associated Builders and Contractors Construction Backlog Indicator remained unchanged for
two months running.1 While housing starts took a jump up in May2, contractor confidence dipped
in June3. What does that mean for used heavy equipment values?

A watchful cautious optimism that dominated early this year has turned into a full-on waiting
game. Much needed contracts have yet to appear from promised federal and state programs
and it is borne out in the numbers. “I’m keeping my fingers crossed that we will see some of this
federal money turn into actual contracts,” reported Chief Economist at General Contractors of
America, Ken Simonson in the latest edition of The Dirt podcast from EquipmentWorld. 4

This is due, in part, to the long-term nature of key infrastructure programs such as the nine large
scale projects chosen for the Mega Program (the National Infrastructure Project Assistance
program) as well as the hundreds of smaller state and local government projects that have yet
to be selected for these federal grants.” According to many analysts, 2023 should bring sizable
increases in investments and the development of long term projects that state administrations
had been considering for some time.”5 And yet many contractors are still playing the waiting
game.

Year over year gains remain high, and values for lift/access heavy equipment are having a
moment. But the real winners in the 2023 heavy equipment market are on the rental side. There
are signs that 2023 will be an even better year than projected for the equipment rental market.
In fact, in a report just issued from the American Rental Association, the percentage growth for
2023 has been adjusted higher than was initially predicted, “earlier in 2023, the year-over-year
growth was expected to be just 4.7 percent in 2023,” stated Alexis Sheprak for Rental

1
ABC’s Construction Backlog Indicator Steady in June, Contractor Confidence Down

2
United States Housing Starts
3
ABC’s Construction Backlog Indicator Steady in June, Contractor Confidence Down
4
Mid-Year Forecast: Where Does the Construction Economy Go from Here?
5
US infrastructure spending starts 2023 with a bang
Management. “The most current projections, however, indicate 7.6 percent growth in 2023
totaling $60.4 billion in construction and general tool rental revenue.”6

While life is rosy on the rental side, used heavy equipment managers will be cautiously watching
if those much anticipated infrastructure projects turn into actual contracts. If construction
spending rises, and infrastructure projects finally get underway, the fall could be warmer than
anticipated for the used heavy equipment market.7

6
Rental Management recognizes the equipment rental industry’s 2023 Market Movers
7
Monthly Construction Spending, May 2023