From the recent ASA Advisor prepared for ASA members by ITR Economics, U.S. industrial production continues to grow, up 1.3% in October on a year-over-year basis.
ITR notes Total Manufacturing Production (up 1.2%) and Mining Production (up 4%) are accelerating and lifting the growth rate for U.S. industrial production. It predicts acceleration for U.S. industrial production will persist into early next year and then production will expand through the remainder of 2018, but at a slowing pace.
Additionally, the wholesale side of the economy also is a source of growth potential, ITR notes. Increasing commodity prices are supporting a rise in wholesale trade of both durable goods (up 5.9%) and nondurable goods (up 6.3%). ITR expects commodity prices to enter the backside of the business cycle in 2018 with natural-gas prices plateauing during the next few quarters, and crude oil and steel prices likely peaking by early 2018. Falling or flat prices will contribute to slowing the pace of growth for wholesale trade next year along with slowing the ascent in the volume of wholesale trade, ITR adds. ITR suggests avoiding locking on costs at the top of the price cycle.
Elsewhere in the report, on the oil and gas front the average drilling activity is increasing on an annual basis, ITR says. It suggests planning for the rig count to increase into early next year in support of rising oil and gas demand. It adds the rig count trend likely is to be stable into 2019.
ITR’s Leading Indicator has not yet signaled a meaningful downward trend, while the ITR Consumer Activity Leading Indicator and the Purchasing Managers Index are signaling slowing growth in the second quarter of 2018. Also, ITR says the sum of leading indicators points to accelerating rise through at least early 2018 for U.S. industrial production, in line with its forecast .