Agricultural equipment sales have increased for six straight months, according to Creighton University’s Rural Mainstreet Index. A recent report from the Association of Equipment Manufacturers shows the outlook for future sales is promising.
The report estimated the off-highway equipment industry and associated products resulted in $416.2 billion in sales.
Of that, $267 billion were direct sales such as skid-steers and combines. Meeting market demand generated $95 billion in upstream spending and industry employees spent $55 billion.
Low commodity prices and inconsistent government support on infrastructure and declining exports have caused the farm equipment sector to struggle in recent years, according to the report.
The report predicts GDP growth of 2.3 percent in 2017, up from 1.6 percent last year. It cites an uptick in consumer spending after the 2016 U.S. presidential election and improving stock market.
It also cites confidence in the industry amid the Trump administration’s plans for tax reform and regulation rollbacks, along with the president’s pledge to invest heavily in infrastructure.
Demand for equipment is likely to increase through 2018 as farmers make replacement purchases they had been putting off during the recession. Combines are likely to be the first units to return to normal sales volumes.
“The bottom line for the equipment manufacturing industry is that improving business fundamentals combined with expected policy actions will allow real equipment spending to pick up in the fourth quarter of 2017,” according to the report.