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Construction Slowdown Leads to Significant Drop in Equipment Resale Activity

Article-Construction Slowdown Leads to Significant Drop in Equipment Resale Activity

JG Photography/Alamy Stock Photo Two Front End Loaders Excavators At Construction Site, USA
But the average fair market value was up more than 11% over December and January 2022, according to EquipmentWatch.

The effects from an ongoing slowdown in the construction sector are becoming more visible with time.

That’s according to EquipmentWatch’s March report, which blamed a sharp decline in construction equipment resale activity on persistently high costs that have contributed to slowdowns in nonresidential construction spending.

The EquipmentWatch report said activity in the resale channel for construction equipment was down by more than a third when stacked against activity levels in that channel in early 2021.

“This is reflective of a larger slowdown in the construction sector,” the report summarized.

While high costs continue to impact nonresidential construction spending, the report said manufacturing-related construction spending jumped 53.6% since January 2022. The Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act is a major reason for the spike, according to EquipmentWatch. The CHIPS Act is a $280 billion spending package aimed at growing the U.S. semiconductor industry. It was signed into law by President Joe Biden last summer.

Resale values rebound, auction activity spikes

Month-over-month decreases in average resale values turned around in the beginning of 2023.

In January, EquipmentWatch said average fair market value was up 11.5% over December, 11.3% over January 2022 and 13.6% over January 2021. Auction values have also continued to rise.

Also, average forced liquidation value was 10.1% higher than December, 51.3% higher than January 2022 and 38.9% higher than January 2021, the report said.

The construction equipment auction channel is far more active than in years past. Auction activity is up 126% over January 2022 levels and up 63% over January 2021 levels, the report shows.

Among the inventory of available equipment on the market, buyers will find that usage rates are higher than what they were.

While the rises in usage rates month-over-month have been negligible, around 1.3%, year-over-year equipment now has a usage rate almost 20% higher than it did in 2021.

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