The AEC Lens Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick is Chief Economist for ConstructConnect. He is a frequent contributor to the Daily Commercial News and the Journal of Commerce. He has delivered presentations throughout North America on the Canadian, United States and world construction outlooks. A trusted and often-quoted source for … More » September’s Mid-Month Economic Nuggets Report – With an Emphasis on Manufacturing Shipments & New OrdersSeptember 20th, 2022 by Alex Carrick, Chief Economist at ConstructConnect
Article source: ConstructConnect
Where the central bank’s interest rate increases really bite is in housing demand (through mortgage rates), car loans and other personal borrowings (to buy stocks, mutual funds, etc.) and business lines of credit (used to meet payrolls and carry both material input and finished goods inventory). Manufacturing Shipments and New Orders Let’s do a review of some of the highlights. In total manufacturing (Graph 1), the value of shipments, with the exception of a small dip in the latest month, have been soaring since mid-2000. Shipments are expressed in ‘current’ dollars, with no adjustment made for inflation. Therefore, some of the climb is due to price increases. As for total manufacturing’s new orders (Graph 2), they’ve also been exceptionally strong over the past couple of years. The ‘construction materials and supplies’ shipments and new orders slopes (Graphs 3 and 4) have lately taken off in even more impressive fashion than the total manufacturing slopes, although there has been some leveling off in the last several months. They do, however, remain way above their previous high points. ‘Ventilation, heating, air-conditioning and refrigeration’ (usually compressed into the term HVAC) shipments and new orders (Graphs 5 and 6) appear to be doing fine. They’re on long-term upwards trajectories. With the increasing emphasis on air quality, this has to be a sub-sector with considerable growth potential. ‘Construction machinery’ shipments (Graph 7) have made a good recovery since their plummet at the beginning of the pandemic in early 2020. New orders (Graph 8), however, are sort of plodding along, without a significant breakout from their record dating back to the 2008-09 recession. This will be interesting to watch, if construction heats up to the degree expected a little further along in the 2020s. Neither shipments nor new orders (Graphs 9 and 10) for ‘mining and oil & gas field machinery’ have returned anywhere close to where they were when domestic ‘fracking’ first became the rage. Again, though, there’s good reason to think they may be on the cusp of doing much better, as the price of energy has perked up dramatically and as a host of other raw materials and commodities are poised for greatly increased demand to carry out the transition to net zero carbon emissions (NZE). Speaking of which, Graphs 11 and 12 make clear that not enough is presently happening, shipments- or new orders-wise, in the domestic manufacturing of ‘turbines, generators and other power transmission equipment’. Something to ponder on is the undesirable possibility that much of the new business tied to bolstering the internal power generation and distribution network in the U.S. may go to import competitors. That will be an opportunity lost. Finally, there are Graphs 13 and 14 to consider. Both shipments and new orders of vehicles have been hampered by an availability issue, with intermittent downtimes for assembly operations caused by an inadequate supply of the microprocessors that ‘boss’ all internal systems, from steering to braking to temperature control. The consequent demand for used vehicles instead has sent their prices into the stratosphere. This will eventually sort itself out. And the demand for transportation equipment, including long-haul trucks and railroad rolling stock, will go hand in hand with concerted efforts to clear up the logistical bottlenecks still making headlines. Graph 1 Category: ConstructConnect |