The forecast for 2019 remains solid for the rural equipment market according to Rural Lifestyle Dealer’s 2019 Dealer Business Trends & Outlook Report. The 2019 report marks the 11th consecutive edition, the only one of its kind to analyze the growing rural lifestyle niche. The survey found that, compared with their production ag counterparts, rural equipment dealers are more optimistic, even when considering an improving ag economy.
Several economic factors could be factoring into dealer sentiment. Home building is one influencer and the National Assn. of Home Builders/Wells Fargo Housing Market Index for December was 56, compared with 72 in January of 2018. The index reflects builder confidence in newly-built, single family homes. Economists say high borrowing costs are restraining demand.
Unemployment rates, another contributing factor in the market, were at 3.9% in December and 4.1% in January of 2018. Economists suggest unemployment rates below 5% are too low and the economy is inefficient. And, low unemployment puts added pressure on the challenges of finding qualified employees.
Alex Chausovsky, senior consulting advisor with ITR Economics, says, the extended period of cyclical rise in the U.S. economy has been atypical. “Typically, if you look at the duration of a rising trend in the U.S. economy, it’s somewhere between 13-19 months. The fact that we are now at 27 months and continuing to rise is really, in my opinion, reflective of the fact that we are in this artificially extended rising streak. We do expect that this boost in economic activity, this rising trend, will come to an end imminently. In fact, we expect that to happen in early 2019. Slowing growth will then take hold, yielding some pockets of actual negativity by the time we get into late 2019 and early 2020 timeframe.”
Chausovsky says the “X factor” for the economy is the administration’s trade actions, particularly tariffs, as well as negotiations with European countries, the United Kingdom and Japan.
Influencing factors within the market itself include the continued growth of the customer base and the maturing of dealers serving the market. More than 53% of dealers say their market has grown 5-19% in the last 5 years and nearly 17% say they’ve experienced growth of 20% or more. More than 70% have been serving rural lifestyle customers for more than 16 years. (See the table “Facts & Figures About 2019 Survey Respondents” at the end of the article for more demographic data.)
Rural equipment dealerships are generally small businesses, with about 70% of the respondents employing 20 or fewer employees. The niche also offers diversity, including hobby farmers, production farmers, municipalities/parks, landscape contractors and construction contractors. (The chart “Breakdown of Customer Segments” at the top of the article provides more details.)
The following information was provided by dealers who participated in Rural Lifestyle Dealer’s 2019 Dealer Business Trends & Outlook survey. It is compiled to provide our readers and other interested parties basic demographic data on the rural equipment dealers who are serving the small acreage farm, hobby farm, large property owner, light contractor and lawn and landscape segment. (Percentages = Dealer Responses)