The MHEDA Journal - First Quarter, 2014 - (Page 58)

INDuSTRy inDUstriAL trUCks FORECAST ITA Forecast: Economic Activity Sustains Industrial Truck Sector Growth T 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 58 MHEDA | 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 those industries.

Table of Contents for the Digital Edition of The MHEDA Journal - First Quarter, 2014

President’s Perspective
From the Desk of Liz Richards
Editor’s Note
MHEDA’s 2014 Board of Directors and MBOA
Ask Your Board
MHEDA Member Profile
At Work
Distributor Forecast
Supplier Forecast
Manufacturer Forecast
Material Handling Forecast
Conveyor Forecast
Industrial Trucks Forecast
MHEDA: 60 Years of Moving Members Forward
Don Chance Retires From NMHG
Convention Preview
The New and Improved 2014 MHEDA Disc Report
New Members
Spotlight on Association News
MHEDA University Calendar
MHEDA Milestones
Index of Advertisers by Product Category

The MHEDA Journal - First Quarter, 2014