North American Construction Equipment Sector 2nd Quarter 2021 Update

Current and Near-Term Trends in the Construction Equipment Sector  The Construction Equipment (“CE”) sector began 2020 with mixed levels of customer demand, but then in March, the wide ranging impacts from the adoption of COVID-19 related safety limitations enacted by many states and provinces across North America started to reduce the volume of sales and rental activity for all of the CE dealers. By mid-May, as some of these safety measures began to be lifted, the CE sector saw a rapid rise in construction activity as contractors rushed to get their 2020 projects and contracts started so they could be completed before year end. For the majority of dealers, the second half of 2020 saw strong customer demand – although there were a few geographic areas which did experience some softness for a variety of reasons.

Most dealers continue to report strong demand through the first quarter of 2021. While non-residential spending remains depressed given the impact of COVID-19 on hospitality, retail and office markets, residential spending is up 21% year-over-year driven by both short-term and long-term supply constraints within the residential real estate market. Residential spending tends to utilize smaller construction equipment which has created significant inventory challenges for dealers within that segment.