The MHEDA Journal - First Quarter, 2014 - (Page 58)
ITA Forecast: Economic Activity
Sustains Industrial Truck Sector Growth
BY BRIAN FEEHAN, PRESIDENT, ITA
he element of a U.S. government
shutdown and the recent fiscal
debate in Washington on the debt
ceiling added some uncertainty to
the markets - although we have yet to accurately measure the exact level of uncertainty
we do believe that there will be some negative
impact in the fourth quarter. However, we also believe with
this political instability behind us that normal economic
activity will resume to a similar pace prior to the shutdown
and debt ceiling debates. As we all know, Congress must
again address these issues in January and February 2014.
Hopefully, lessons have been learned and clear decisions
will be made in a timely manner to avoid any unnecessary
instability in the markets.
U.S. Economic Activity
The Federal Reserve in September cut its U.S. economic
growth forecast for this year and 2014. The economy was
expected to grow between 2 percent and 2.3 percent this
year instead of the 2.3 percent to 2.6 percent range seen
three months ago. For 2014, gross domestic product growth
was trimmed to 2.9 percent to 3.1 percent from the June
estimate of 3 percent to 3.5 percent.
Inflation forecasts continued to remain well below the
Fed's 2 percent target for price stability. The 2013 estimate for
core inflation (stripping out food and energy price changes)
was unchanged at 1.2 percent to 1.3 percent. The rate is not
expected to climb as high as 2 percent until 2015.
Increases in consumer spending and business investments
in the second quarter boosted the U.S. economy, with the
government announcing real GDP growth of 2.5 percent in
mid-September. Even with modest gains in the second quarter, the U.S. has grown slowly in the first half of 2013, up just
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1.8 percent. There have been some indicators in September
that manufacturing activity and other data have accelerated
recently. The National Association of Manufacturers (NAM)
state that "surveys show that manufactures are generally
positive about higher orders and production moving forward.
Yet, it is also clear that persistent headwinds have prevented
even faster economic growth - the NAM anticipates real
GDP growth of 2.0 percent for the 3rd quarter."
Employment is another sector in which we must follow
closely. Automatic Data Processing (ADP) announced its job
estimates recently stating that private sector employment
increased by 166,000 jobs from August to September. ADP
further reported that goods-producing employment rose by
19,000 jobs in September, a slight increase over its August
growth rate. Within the goods producing sector; Construction
payrolls added 16,000 jobs, while manufacturing payrolls
increased by 1,000. Service-providing industries added 147,000
jobs in September, down from 152,000 in August.
The Bureau of Labor Statistics (BLS) announced that the
unemployment rate fell from 7.9 percent in January 2013
to 7.3 percent in August 2013. This recent positive news
about employment is important to help the U.S. economic
recovery but it needs to be sustainable into next year.
Looking at the housing market, it was reported that new
home sales rose 7.9 percent in August to an annual level of
421,000 recovering somewhat from a sharp drop in July.
Higher borrowing costs had started to reduce residential sales
activity, but with the Federal Reserve deciding not to taper its
asset purchasing during its September meeting - mortgage
rates have begun to fall, which should be beneficial in the
short term. Many lift trucks are used in the housing industry, so we will continue to monitor this data point carefully.
Another set of data that we looked at is the Institute for
Supply Management's September Manufacturing ISM Report.
This is a widely followed report because analysts believe it
provides an advance look at manufacturing conditions and
outlook that government reports don't cover as quickly. It
is important for us to recognize this report does not track
hard data but the present situation in a number of industries derived from a survey of purchasing managers from
Table of Contents for the Digital Edition of The MHEDA Journal - First Quarter, 2014
From the Desk of Liz Richards
MHEDA’s 2014 Board of Directors and MBOA
Ask Your Board
MHEDA Member Profile
Material Handling Forecast
Industrial Trucks Forecast
MHEDA: 60 Years of Moving Members Forward
Don Chance Retires From NMHG
The New and Improved 2014 MHEDA Disc Report
Spotlight on Association News
MHEDA University Calendar
Index of Advertisers by Product Category
The MHEDA Journal - First Quarter, 2014