“Optimism” may be a good description to highlight January’s Industrial Heating Equipment Association’s (IHEA) Executive Economic Summary. It states, “The US economy has started the year in better shape than had been expected. Now the attention of the economist has been focused on two questions. The first, why the headwinds that were expected to slow things down haven’t? And the second, how long can this situation be expected to last? Despite the predictions that consumers would become weary and businesses would begin layoffs at the start of 2020, “… some of the pressure was released with the ‘phase one’ deal with China and the consumer just seemed to power through their concerns.”
The summary reports, “In looking at the index readings this month, the news is pretty good. Of the eleven, there are seven that are trending positive and four that are pointing in a more negative direction. The more important note is that the good news readings are very strong and the negative readings are not so dramatic.”
Of the seven positives indices, new housing starts experienced a dramatic rebound, and the housing sector is as strong as it has been in some time. Additionally, the reports states, “There was also some significant gain in terms of steel consumption. The automotive sector and the energy sector have helped boost demand.”
One other significant area of growth to note is the PMI, “There was a very impressive rebound as far as the Purchasing Managers’ Index was concerned. The overall index jumped back into expansion territory with a reading of 50.9 but an even bigger leap was noted in the New Orders index as it went from 46.8 to 52.0. Given the future orientation of the new orders data, this is good news indeed.” Other indices showing a positive growth were capital expenditures, durable goods, factory orders, and the credit manager’s index.
Those indices that weren’t as upward trending, but not “all that depressing” were new automobile/light truck sales, falling metal commodities prices due to lack of demand, and capacity utilization. The transportation index seems to be more of a concern, “The slip has been mostly in the rail and maritime sectors thus far as both have been affected by the trade wars and other interruptions in the global economy. The bottom line is that the bad news data has not been all that serious and most are likely to see some improvement in the future if the good news data keeps coming in.”
In conclusion, the news is better than expected this month with much growth. However, we can’t ignore the coronavirus and that its effect on the global economy has yet to play out completely.
The report is available to IHEA member companies. For membership information and a full copy of the 12-page report, contact Anne Goyer, Executive Director of the Industrial Heating Equipment Association (IHEA). Email Anne by clicking here.
