Issue link: https://read.dmtmag.com/i/1538279
IDA Universal Aug - Sept 2025 18 OEM Off-Highway Equipment Outlook: Heightened Confusion and Uncertainty The off-highway equipment market entered the second quarter of 2025 in a height- ened state of confusion and uncertainty. The first half of 2025 was univer- sally expected to be weak reflecting projected slowing of U.S. economic growth, expected sticky inflation, elevated interest rates, com- pounded by significantly excess inventories in virtu- ally all markets. A modicum of hope was building that the sector was approaching a trough around mid-year based on some positive signs for U.S. manufacturing in Q1 2025. The Institute for Supply Management (ISM) Manufacturer Purchasing Managers Index (PMI) turned modestly positive for the first time in 26 months, global manufactur- ing showed modest expan- sion, inflation has cooled somewhat, and most man- ufacturing sectors expected some resolution of the new administration policies related to the Biden-era spending spree in the Infla- tion Reduction Act, CHIPS Act and the Infrastructure Investment and Jobs Act. As Q1 2025 ended, there were heightened signs of significant political activity which could have substan- tial impact on the outlook for the remainder of the year on the off-highway markets, the manufacturing sector and the potential growth of the U.S. econo- my. The proposed One Big Beautiful Bill Act on tax and spending reduction and reciprocal tariff policies set off growing skepticism and fear of their impact on virtually all end market forecasts. Immigration uncertainty and accelerat- ing deportations threatened labor availability. Global manufacturing began to soften, and the ISM Man- ufacturing PMI fell back below expansion levels. This was followed by April 2, supposedly "Liberation Day," which set off a seis- mic reaction to the potential changes in U.S. government trade policies. Significant confusion and uncertainty have been created by the new tariffs, ongoing trade nego- tiations, and the unfolding tax bill compounded by the continuing Legal roadblocks set up by numerous court rulings. The negative -0.2% GDP (revised) reported for Q1 2025 heightened the fear of recession though the nega- tive print was mostly caused by a 42.6% surge in imports reflecting the fear of tariffs; adjusted Q1 2025 gross domestic product (GDP) was more likely around 3%. To add to the confusion, the Federal Reserve Bank of Atlanta raised its forecast for Issues impacting investment-making decisions point to caution in construction, agriculture and mining equipment manufacturing. Source: @oticki | adobe.stock.com Eli Lustgarten Story continued on pg 20