Machinery Prices Are Stable in Early 2003

Printing equipment prices have dropped by 0.5% since January after a 1.6% price gain in the second half of last year.

Prices for lithographic press equipment have remained unchanged during the last two years. While binding machinery prices have held steady for nine months, non-lithographic press prices have declined by 3.7% in 2003, and miscellaneous machinery prices have fallen by 1.0%.

The sudden turn from a 0.5% to -1.0% rate of inflation to more than 1% deflation does not indicate any unique weakness in the printing or printing equipment markets. Rather, it mirrors price changes for other capital equipment during the stall in economic expansion earlier this year. The decline is expected to end during the fall, with prices rising at a 0.5% to 1.0% pace again as printing volume rises in a renewed economic expansion.

There is a risk of significantly higher equipment price increases in 2004 from the recent depreciation of the U.S. dollar—9% so far, and still dropping.

Meanwhile, the euro has appreciated 20%. European exporters have chosen to absorb much of this currency translation loss so far in a weak market environment, but they will be looking to raise prices when sales are higher. This will provide cover for other equipment suppliers, both domestic and Japanese, to boost prices.