Machinery Makers See Increased Demand 'Across the Board'

Machinery Demand on the Rise

Companies have seen increased demand across the board in the Farm and Construction Machinery sector. Several factors are combining to create a good earnings season for many companies within the sector. Emerging and developed markets have both seen strong growth in the recent quarter. While many companies have focused most of their investments on emerging economies like China, Latin America has actually been one of the strongest markets recently. Countries there, especially Argentina and Brazil, have experienced high double digit growth in equipment sales as compared to last year. Some economists predict the global economy will grow 3.5% next year, with 6.5% growth in emerging markets. The weak U.S. dollar has also been helping sales for American companies.

On the agricultural side of things, machinery companies have seen a huge boost from growing corn prices. Demand for corn has been high due to a projection that 37% of this year's crop will be used for bio-fuels. It's expected that the profits gained from high prices should trickle down to the Farm and Construction Machinery sector as farmers look to upgrade and repair equipment they had been putting off due to weak markets.
Renewed levels of spending are also taking place in the mining equipment industry. After putting off upgrades and repairs due to weak commodity prices, miners are beginning to spend money on equipments now that coal, copper, and iron ore prices have recovered.