An Economic Outlook on Manufacturing
At the recent IMTS Winter Economic Update webinar, AMT VP-Strategic Analytics Pat McGibbon discussed the forecast for the manufacturing industry through 2019. (AMT – The Association For Manufacturing Technology owns and operates IMTS – The International Manufacturing Technology Show.)
With notable projects in all business sectors, economic indicators trending high, and increased consumer demand for durable goods, 2018 has finished strong for manufacturing, and the first half of 2019 will continue to grow at lower levels than 2018. He points out that uncertainty over trade is likely to impact economic growth in 2019.
Business sectors with a strong influence on the manufacturing industry include automotive, aerospace, medical, off-road/agriculture/construction, and energy & power generation.
All sectors are above 70 percent of their capacity utilization with energy and power leading at 82.5 percent and off-road/agriculture/construction with the lowest at 71.3 percent. The Industrial Production Index for these sectors is above 90, except off-road/agriculture/construction at 80.3. Automotive is leading at 131.8. All sectors have notable building projects with most taking place in the Southeast region of the United States.
With consumer sentiment, capacity utilization, industrial production, and corporate profitability remaining high, demand for manufactured goods is expected to stay strong through the first six months of 2019. New investment in manufacturing technology suggests the economy is getting a second wind.
The Purchasing Managers Index (PMI) from the Institute for Supply Management rose to 57.7 in October, the 26th consecutive month where the index has remained above 50, indicating expansion for manufacturing. New-housing starts continue to be one million per month. The Baltic Dry Index that measures cargo traffic on the ocean is still low but continues to grow.
Some things that are bringing uncertainty into the economic projections for 2019 are the tariffs on goods from China and steel and aluminum from trade partners including Europe, South Korea, Japan, Australia, Brazil, and Argentina. The United States-Mexico-Canada Agreement has made improvement in areas such as service and standards, but many are taking a “wait and see” attitude about its impact.
In summary, the market for manufacturing technology is likely to remain strong through the first half of 2019 but grow at a slower pace than in 2018.
To review Pat’s webinar slides, visit the Beyond IMTS channel on IMTSTV.