Industrial Heating Equipment Association releases June economic outlook
The Industrial Heating Equipment Association’s June 2018 economic outlook shows many of the industries it follows either changing slightly or remaining “status quo.”
“That is consistent with the data that has been coming from other measures of the economy and that is an interesting place to be right now—and a predictable one,” IHEA said. “The real economic watchword might better be ‘indecisive’ or ‘confused.’”
New-home starts
In terms of new-home starts, IHEA said the housing sector “continues to defy the odds as well as the analysts.” IHEA noted the most recent data “shows that much of that growth this month was the multifamily and in communities that are still battling a shortage of available housing.”
IHEA noted there has been some decline in permits issues and the association pointed out that may signal a slowdown in building activity down the road.
Steel consumption
IHEA labeled the steel sector as remaining in some turmoil “as few have any sense of where the policy initiated by (President) Trump will go.”
IHEA said steal consumption still is being driven to some degree by “the users that are trying to hedge against higher prices down the road.”
Industrial capacity utilization
IHEA said the rate of capacity utilization continues to creep closer to a level that would be considered normal (80% to 85%). That rate fell back in June a little.
“One of the factors at work here may be the impact of the corporate tax cuts,” IHEA noted. “This money has been spent in a variety of ways, but the small and mid-size companies have mostly been investing in new capacity – both human and machine. There is a period after a new machine is purchased when the output falls short of the investment – it takes time to get the maximum output (and that goes for new hire as well). There is a period in which capacity is not used efficiently, but as the machines are integrated, people are trained and new customers are brought on, the capacity is used efficiently again. That has been part of the reason for the slow advance towards normalcy.”