The MHEDA Journal - First Quarter, 2015 - (Page 64)

INDUSTRY INDUSTRIAL TRUCKS FORECAST Continued Stability in the Market I BY BRIAN FEEHAN, PRESIDENT, ITA n the aftermath of the midterm elections, the balance of power in the US Senate has changed hands. What impact will that have on business, tax structure, regulations and overall economic activity? Will this slim majority break the deadlock in Washington? How will the markets react? US Economic Activity Let me start with a high level overview of the current economic conditions in the US. Let me also caution that, as we all know, news and forecasts about today's economic environment can vary quickly. The Federal Reserve announced real GDP increased by a healthy 4.0 percent in the second quarter of 2014, more than offsetting the 2.1 percent drop in output during the first quarter. Consumer and business spending contributed to the higher figure. Inventory investments alone contributed onethird of the growth in real GDP for the quarter, with higher investment levels for housing and nonresidential structures. Even with the strong second quarter - real GDP rose by only 0.9 percent for the first half of 2014. Fortunately, the good news is that manufacturers are cautiously upbeat about future growth. The Federal Reserve's March projections in real GDP for 2014 issued this past June report a 2.8 percent to 3.0 percent annual growth. Inflation has moved up in the recent months but remains below the Federal Open Market Committee's (FOMC) 2 percent target for inflation over the 64 MHEDA | longer run. The 2014 estimate for core inflation (stripping out food and energy price changes) rose 1.5 percent. FOMC projects that both total and core inflation will be between 1-1/2 and 1-3/4 percent for this year as a whole. The National Association of Manufacturers (NAM) states that "despite a weak start to 2014, there is an expectation among manufacturers that the second half of the year will be better than the first. Average manufacturing sales forecasts in the latest survey were the highest in two years, with capital investment and hiring plans also moving in the right direction. These data points were consistent with 4.0 percent production growth in the sector between now and the fourth quarter of this year, and roughly 86 percent of respondents were either somewhat or very positive in their outlook". (Source: NAM) These findings mirrored similarly optimistic assessments from business economists, who predict real GDP growth of 3 percent or more in each of the remaining quarters of 2014, with industrial production up 3.7 percent for the year as a whole. Automatic Data Processing (ADP) announced its job estimates recently stating that private sector employment increased by 204,000 jobs from July to August. Goods-producing employment rose by 41,000 jobs in August, an increase over its July growth rate. Within the goods producing sector; Construction payrolls added 15,000 jobs, while manufacturing payrolls increased by 23,000 jobs in August - the highest total in this sector since December 2012. (Source: ADP) The Bureau of Labor Statistics (BLS) announced that the unemployment rate was 6.1 percent in August 2014. Employment levels in the US remains positive news and serves as another indicator that point to economic recovery. The housing market was a positive contributor to economic growth this year, however, the residential market remains a challenge. Improvements in housing starts and permits have raised expectations and there were increases in both existing and new home sales in April. Still, the housing market remains weaker today than it was several months ago. Existing home sales, for example, have dropped 13.6 percent since peaking in November of 2013, and new single-family home sales have declined 3.9 percent since January of this year. 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 them an advance look at manufacturing conditions and outlook that

Table of Contents for the Digital Edition of The MHEDA Journal - First Quarter, 2015

MHEDA’s 2015 Board of Directors and Mboa
Lift Atlanta, Inc
Sara Mcmurray, Flow-Rite Controls
Distributor Forecast
Confident Supplier/associate Members Ready for Continued Growth in 2015
MHI Predicts 8-9% Growth for 2015
CEMA Expects Growth
Continued Stability in the Market
Investment Spending Will Drive Growth
What in the World Is Going On?
Quality Lift Trucks Undergoes a Major Succession and Transition Plan

The MHEDA Journal - First Quarter, 2015