Construction spending falls 0.4% in September despite homebuilding gains
U.S. construction spending fell 0.4 percent in September as nonresidential spending declines wiped out homebuilding gains during the month.
Construction spending is at a seasonally-adjusted annual rate of $1.150 trillion, according to preliminary data from the Commerce Department. With the September decrease, the spending rate is 0.2 percent below the September 2015 rate.
Spending in the private homebuilding sector rose 0.5 percent to $454 billion, and is 1 percent above the year-ago rate. Spending on the construction of single-family homes rose 0.1 percent during September to a rate of $236.5 billion, while multi-family housing spending rose 2 percent to $62 billion.
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CNH Industrial profit jumps in 3Q despite sales decline
Though the company continues to see sales declines in its agricultural equipment segment, CNH Industrial was able to report increased profit for the third quarter thanks to cost reductions and improved demand in certain markets.
The company, which manufactures the Case and New Holland brands of heavy equipment, reported a 1.7-percent sales decline in the 3Q to $5.7 billion. Profit rose 167 percent to $39 billion. (In 3Q 2015, the company reported a loss of $128 million.)
“Our third quarter results were consistent with our expectations,” said Richard Tobin, chief executive officer of CNH Industrial. “Despite the challenging demand environment in our agricultural equipment business we have been able to increase our comparable profit margin for the quarter in the segment as a result of proactive cost control measures, and improved equipment demand in Latin America. Our commercial vehicles business continues to gain market share in Europe as our new vehicle product launches continue to gain traction in the market.”
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Caterpillar dealer inventories down from 2015 with more “substantial” reductions coming
Aside from lower oil prices and sagging demand for mining equipment around the globe, sales of Caterpillar heavy equipment have also been negatively impacted by lower dealer inventories.
In a statement on dealer inventories accompanying its third quarter earnings—which included reduced expectations for fiscal year 2016 sales—the company says dealer inventories in the third quarter of 2016 fell even further than they did in the same quarter of 2015, with more inventory reductions planned for the fourth quarter.
Cat reports that dealer machine and engine inventories fell about $700 million in Q3, compared to a decrease of $600 million in Q3 2015. So far this fiscal year, Cat has reduced dealer inventories about $800 million.
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Caterpillar sales down again in 3Q as profit plummets 48%
Citing economic weakness and idle mining trucks around the globe coupled with an “abundance” of used construction equipment and idle locomotives in North America, Caterpillar reported another down period for earnings today.
With total sales falling 16 percent to $9.16 billion in the third quarter and profit plummeting 48 percent to $481 million, the world’s no. 1 heavy equipment manufacturer again revised downward its outlook for the rest of 2016 and says that it isn’t expecting an improvement in 2017.
As has been the case for some time, declines in demand for mining equipment and the impact of low oil prices are the primary factors behind sales declines, which affected each of the company’s segments and occurred in all regions the company serves.
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INFOGRAPHIC: Dozer sales and buyer trends
A snapshot of new and used sales trends of dozers from Randall-Reilly’s Equipment Data Associations and TopBid auction price service.
Click here for the infographic with monthly figures.