Economic forecast is blazing hot
It’s hot. While the temperatures in most of the U.S. hover somewhere between an oven and molten lava, the hottest forecast may be the summer economic outlook. Quite simply, it’s a great time to be in the manufacturing technology business.
While there are potential hurdles and pitfalls to look out for, the foreseeable future is bright – and blazing hot, according to AMT – The Association for Manufacturing Technology’s summer economic outlook webinar. Here are five takeaways from AMT’s Chief Knowledge Officer Pat McGibbon and Research and Survey Manager Chris Chidzik to help you seize the summer sizzle.
Get ready to roar. The economy is roaring back to life. While some economists have estimated that GDP growth peaked in the second quarter of 2021, the economy should remain in growth territory, albeit at a slower pace. That sustained growth should continue into 2023, according to McGibbon.
Through May, orders of manufacturing technology, measured by the U.S. Manufacturing Technology Orders (USMTO) report, were 50 percent above the first five months of 2020 – and not far off the pace of the phenomenal start to 2018, Chidzik says. In only three other years since 1998 have orders reached $2 billion by May.
McGibbon explains that the recovery from this recession has been so rapid in large part because savings levels increased during this recession – which is atypical. Now, consumers have money, and they want goods. That’s good.
Wanted: automation. The demand for automation accelerated during the pandemic recession. Demand for automation traditionally increases during a recession because employees are in short supply, which drives wages and prices up. Automation helps mitigate price and labor cost increases. This has been even more true during this recession because it was triggered by a global pandemic that required people to stay home to stay safe. Automation saved the day, and it will continue to save money.
It’s not ALL about automotive and aerospace anymore. People are finally flying again. Demand for cars and trucks is high. However, given the shortage in semiconductors and electrical parts, as well as new Federal Aviation Administration regulations, there is still a lag in growth in both sectors. That’s still good news. When the automotive and aerospace sectors do come back (and they will), they’ll come back big, McGibbon explains.
In the meantime, there are new and emerging sectors to fuel growth in manufacturing technology. Manufacturing technology providers should continue looking at other industries to sustain them now – and to continue to support them later. “Where we are right now, no one industry could fail and hurt the momentum because there are so many other industries doing well,” McGibbon says. “We truly have a diversified customer base.”
Housing starts are incredible. The stratospheric demand for housing shows no sign of slowing. That means manufacturers of everything that goes into a house – from dishwashers to HVAC systems – are investing in capital equipment, ramping up production, and using job shops – all just to keep up.
Job shops are flourishing. Throughout the pandemic, job shops grew. As OEMs looked to contract out work, job shops answered the call. Chidzik notes that 40 percent of all new manufacturing technology orders are coming from job shops – which are near capacity and still growing. That’s a trend we can all get behind.
To gain more insight into market trends and industry forecasts for the manufacturing technology industry, be sure to attend AMT’s MFG2021 + MTForecast conference, November 2-5, 2021, in Denver, Colorado. Visit TheMFGMeeting.com for details.
About the Author
Patrick McGibbon was promoted to Chief Knowledge Officer for AMT in early 2019. As CKO, Pat is the association’s chief economist, ombudsman, and a member of AMT’s Strategic Alignment team. He heads survey expansion projects, inter-association collaboration in business intelligence, R&D on intelligence projects, and is staff liaison for AMT’s Economics & Statistics Committee and AMT/USCTI’s Joint Statistics Committee.