Equipment shipment forecast

The Outdoor Power Equipment Institute (OPEI) has updated its Economic Forecast for consumer equipment and commercial turf products. As of August 2001, the forecast shows a continued decline in shipments for the 2001 model year, but a slight rise in 2002. The slowing U.S. economy is clearly contributing to the decline. However, the tax cut and expansionary Federal Reserve policy should start the economic healing process.

The OPEI currently predicts that walk-behind mowers will fall by 9 percent for 2001, from 6,201,000 in 2000 to 5,645,537, while all riding units (rear-engine, front-engine and garden tractor) will fall by 12.4 percent to 1,503,072, compared to 1,715,359 last year. The original predictions were more optimistic with walk-behind mowers estimated to fall only by 1.8 percent and all riding units dropping by 3.8 percent for 2001. OPEI updated its forecast to reflect estimates of the total shipments for model years 2001 and 2002.

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Most products are expected to rebound, according to OPEI, but the recovery will be slow. Even though shipments of rear-engine riding mowers are expected to drop from 157,369 to 133,212 in 2001 — a decrease of 15.4 percent — they are forecasted to rise 1.6 percent to 135,342 in 2002. Also, the percentage of riding garden tractor shipments is supposed to drop 8.9 percent from 198,450 in 2000 to 180,740 in 2001, but they are expected to go up 1.5 percent with 183,479 shipments in 2002.

Source: Outdoor Power Equipment Institute, Inc. (Alexandria, Va.)

NEW RESIDENTIAL CONSTRUCTION

Even though present construction activity isn't reaching the high levels of the late 1990s, it remains strong in historical context. The housing market continues to help stabilize the economy with housing starts picking up by 13 percent at 1.67 million units for July. Single-family units are up by 14 percent and multi-family starts are up by 19 percent at 333,000 units. Regionally, the construction starts rose in the Northeast, South and West, but were down in the Midwest.

Builders are constructing more in response to the recent growth in the demand for homes. This demand has held up against weakening job markets and eroding income growth. Single-family homes have become very affordable despite rising house prices. The low costs of financing a mortgage have more than offset the rising prices. Low mortgage interest rates — the rate on a 30-year fixed mortgage is down near 7 percent — are the main supports to the housing demand.

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