ASA Advisor: Industrial production ahead of 2017 numbers
The American Supply Association’s monthly Advisor, produced by ITR Economics for ASA member companies, shows U.S. industrial production in the 12 months through April was 2.6% above the year-ago level.
ITR notes each major component of the industrial economy still is growing at an accelerating pace. U.S. total manufacturing production was up 2%, while U.S. electric and gas utilities production was up 1.7%, ITR points out.
ITR says activity will rise throughout 2018, although the pace of growth will slow late in 2018. U.S. industrial production, it continues, will then contract in 2019 before subsequently rising in 2020.
ITR suggests evaluating your business to see if it correlates well to the macroeconomy and if your business is likely to go into recession next year. If it is, ITR says to consider building your reserves of cash to prepare for weaker activity in 2019.
Elsewhere in the June Advisor, ITR finds firms are increasing investments to take advantage of a growing economy. U.S. nondefense capital goods new orders (excluding aircraft), a measure of business-to-business activity, are growing at an accelerating pace, up 8.7% from the year-ago level. However, ITR points out U.S. corporate profits for domestic nonfinancial industries are falling. This suggests, as ITR explains, that firms will have less resources available to invest in new capital goods, which will contribute to weakness expected in this sector later this year and in 2019.
In its “Make Your Move” advice area, ITR suggests as the economy turns down in 2019, consider offering less-expensive products to appeal to more price-conscious clients. Market how you can save consumers and businesses money.
In terms of manufacturing, ITR says total manufacturing production is an accelerating growth trends with heavy-duty truck production up 30.7% on a year-over-year basis and is an area of opportunity. ITR says plan for contraction in 2019 by building up case reserves. This, ITR says, will better position your company to invest for the growth trend in 2020 while other firms are trying to catch up.