ASA Advisor, prepared for association members by ITR Economics, shows U.S. industrial production during the 12 months through July was up 3.2% from the same period a year ago.
ITR reports activity is rising at an accelerating pace with U.S. total manufacturing production up 2.2%, U.S. mining up 10.6% and U.S. electric and gas utilities production up 2.8%.
ITR says growth in U.S. industrial production will persist through the remainder of this year, but it expects the pace of rise to slow by the end of the year and companies should plan for mild contraction in 2019.
Additionally, it notes the U.S. industrial economy is benefitting from accelerating growth in exports, which are up 8.1% on a year-over-year basis. ITR mentions the U.S. dollar is strengthening, which signals production will transition to the back side of the business cycle in the near term as the benefits of a weakened dollar fade for exports.
ITR also brings up the retaliatory tariffs implemented by major trade partners such as China, Canada and Mexico and how they also pose a downside risk to exports.
ITR says U.S. private-sector employment is growing at an accelerating pace, up 1.8% from a year ago and it predicts this trend will persist through the remainder of 2018.
ITR notes a tight labor market will make it more challenging to find qualified applicants. It suggests increasing monetary and non-monetary benefits to attract and retain top talent. The pace of growth for employment, ITR says, will slow in 2019, but it anticipates further tightening in the labor market during this time. ITR also suggests looking to labor-saving technologies to enhance the productivity of existing staff.
In terms of near-term and long-term outlooks, ITR still sees slowing growth in the remainder of 2018, a mild recession in 2019 and growth in 2020.
The Rotary Rig Count in the 12 months through August is up 30.4% from the same timeframe a year ago, but ITR points out the pace of rise for the rig count is slowing. ITR’s expectation of falling oil prices late in 2018 and in 2019 suggests the count with face further downward pressure.
Finally, wholesale trade is rising at an accelerating rate in both its durable and nondurable segments, ITR reports. ITR says slowing growth trends will take hold by the end of 2018 and persist through next year for each component. ITR does not expect a recession during this cycle, but firms, it says, should take caution not to budget linearly.