Commercial Integrator + Security Sales Sept/Oct 2023 - 12

AV AS A BUSINESS
What About the Economy
Has Changed for Integrators?
A recap of Dr. Chris Kuehl's midsummer update for integrators, explaining current employment
data, construction numbers and supply-chain recovery. By Mike Abernathy
DR. CHRIS KUEHL, NSCA's famed
chief economist, speaks frankly to
Business & Leadership Conference (BLC)
attendees every year, giving them a handle
on how the economy will impact business.
A Trusted Information Source
When Dr. Kuehl speaks, everyone listens.
Although he might not have a crystal ball
(yet), he does a great job of giving NSCA
members accurate economic insight
and analysis, thus empowering them to
prepare for opportunities and challenges
that lie ahead. At the mid-July webinar, Dr.
Kuehl said that, overall, the economy is
faring well.
Infl ation is still hot where the drivers
are wage increases as well as construction
and material prices. The Federal Reserve
is still fi ghting this, and Dr. Kuehl predicts
two more quarter-point rate hikes are
possible by the end of the year. If infl ation
does, in fact, continue to occur, then the
Fed will continue to tighten through tactics
like interest-rate increases. Looking
across the horizon, there will be a few geographic
recessions as well as sector-specific
recessions. However, economic data is,
for now at least, showing what Dr. Kuehl
calls a " soſt landing " for the U.S. economy,
with no true recession in the forecast.
Soft-Landing Indicators
What follows are three indicators of the
expected soſt landing:
1. Lots of Jobs and Low Unemployment:
Unemployment levels remain low.
Although the average unemployment rate
is 6%, the U.S. is currently sitting at a 3.4%
unemployment rate. Job openings are
still well above normal levels, as well. On
average, there are six million openings at
any given time across the country. That
number is thought to testify to a " balanced
market, " where supply meets demand.
Currently, there are more than 10 million
U.S. jobs available - some four million
more than the average. Why do these
positions remain unfi lled? In many cases,
the people who are looking for work don't
have the right skills to fi ll those positions.
It might also be due to a shrinking labor
force, as some workers get closer to retirement
and as others continue to choose not
to return to the job market post-pandemic.
Looking specifi cally at construction,
there are 123% more job openings today
than there were during pre-pandemic
times. The 10-year average prior to 2020
was about 164,000 job openings; today,
however, the industry is attempting to fi ll
more than 366,000 jobs. Meanwhile, construction
wages are up 4.7% year over year.
■ The non-residential construction
sector is growing by 17%.
■ Single-family housing construction is
down 25%.
■ Multifamily housing construction is
up 20%.
■ Manufacturing construction is up 76%.
Easing Supply-Chain Pressures
3. Supply-Chain Improvement: Worldwide,
supply-chain pressures have eased
considerably, but products are still in
short supply in some regions. In the U.S.,
it's estimated that 23.7% of the market is
eff ectively " balanced, " while 65% is currently
overstocked relative to the 10-year
average between 2009 and 2019.
As several companies rushed to overThere
are more than 10 million U.S. jobs available
- some four million more than the average. Why do
these positions remain unfi lled? In many cases,
the people who are looking for work don't have the
right skills to fi ll those positions.
Although some integrators might be
experiencing slower construction in their
regions, this slowdown isn't due to job
abandonment so much as it's due to projects
being delayed due to cost volatility
and labor issues.
2. Growth in Certain Sectors: Although
some sectors, such as fabricated metals
and communications equipment, are experiencing
their own endemic recessions,
other sectors are experiencing signifi cant
growth. Those growing sectors include
automotive, computers, defense, electrical
equipment and appliances, and manufacturing.
The statistics shared by Dr. Kuehl
also shed some light on certain areas:
12 Commercial Integrator+Security Sales & Integration | Sept/Oct 2023
stock to cover component shortages and
supply issues, many now have too much
inventory. This percentage must reduce
before ordering picks up. That said, new
orders for durable goods accelerated once
again in April.
Dr. Kuehl says that, at a time when global
demand is weak, raw-material inventory
levels should climb. But geopolitical problems,
the pandemic, worker absenteeism,
labor shortages and other factors are
delaying the inventory buildup. CI
MIKE ABERNATHY is director of business
resources for NSCA. Learn more about NSCA
by visiting NSCA.org.

http://www.NSCA.org

Commercial Integrator + Security Sales Sept/Oct 2023

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