While the US economy continues to expand, the pace of growth has been very slow and has become even slower over the past few months. Most economists are now predicting a 1.5% to 2.0% growth in GDP in 2012, not great but hopefully better than the 1.7% growth we saw in 2011. News and forecasts about today’s economic environment can change quickly and with the fiscal decisions facing our political leaders in Washington, predicting economic activity can be challenging.
In October, the Bureau of Labor Statistics (BLS) announced that the unemployment rate fell from 8.1 percent in August to 7.8 percent in September. This unexpected drop was largely the result of 873,000 additional employees counted in the household survey, with a sizable portion of that stemming from more people working part time because they could not find full-time work.
The lower unemployment rate does not change the fact that the economy remains weak, especially for the manufacturing sector. There were just 114,000 non-farm payroll jobs added in September, with 16,000 fewer manufacturing workers. This was the seventh consecutive month of overall disappointing non-farm payroll growth. This speaks to the significant weaknesses seen in the global economy and uncertainties about U.S. growth heading into 2013.
Data on manufacturing activity is mixed. The Census Bureau noted steep declines in new durable goods orders. This decrease was mainly in the transportation sector, particularly for aircraft, but sales and shipments of durable goods were largely down across-the-board. However, in contrast nondurable goods activity was higher.
Meanwhile, two other datasets reported recent improvements. The Institute for Supply Management’s (ISM) Purchasing Managers’ Index surprisingly rose from 49.6 in August to 51.5 in September. New orders helped to lift the overall index, even as export sales continued to contract. The importance of this data is that the ISM index suggested modest growth last month, ending what would have been the fourth consecutive month of contracting activity.
The recent slowing activity – even if temporary – demonstrates the cautiousness of this economic recovery. The growth path for the US economy continues to be positive overall.
The basis for the conclusion is that we have the Bush Tax cuts scheduled to end in December of 2012 and at the same time mandatory spending cuts are to kick in. Many economists believe that these two events combined could take 3.5% out of the economy, which in effect negating all and more than the total growth for 2012. This would amount to running off of a fiscal cliff and would add even more pain to the most protracted recovery in most Americans lifetime.
The presidential election has been decided and a new Congress will convene in January 2013. There are some big challenges and decisions facing our elected officials, decisions that will have an impact on our economy – so yes – Washington in fact may decide.
In 2011 – total forklift sales for classes 1 through 5 was slightly over 166,000 units this compares to the 136,000 total units for classes 1 through 5 in 2010. So we are seeing at the present time some growth & stability in the market. We recently surveyed the ITA members – and – as a collective group we are forecasting total unit sales of truck classes 1 through 5 in 2012 to be approximately 165,000 to 175,000 units. Some of our most recent data that we have collected continues to support this forecast for 2012.
Currently most ITA members are optimistic regarding 2013 – predicting through the ITA’s quarterly survey in October of 2012, the ITA Board of Directors estimate approximately 175,000 to 180,000 new truck orders in 2013.
The US forklift manufacturers continue to focus improving customer satisfaction through increased efficiency, technology and safety on the products being sold. Some of the market trends we expect to see are increases in the size of rental fleets. This could be another indication of how many of our customers are viewing the economy with cautious optimism. Customers would like the ability to add capacity quickly but with the flexibility of not committing capital.
Like most industry organizations – there are no lack of challenges and opportunities for the ITA to address as a collective group. However, again like most industry organizations, we must prioritize those challenges and opportunities and focus on the issues where we can be as efficient & effective as possible recognizing our ability to positively impact issues of most concern to us.
The ITA priorities are: international cooperation, engineering practices, accurate & timely statistics, industry communications & networking and the continuation of our OSHA Compliance Officer Training program.
Free or fair trade is something the ITA has been striving to achieve for several years. In our own businesses, we continuously work toward operational improvements, harmonization of standards, sharing of global statistics and increased international collaboration. This issue of “Fair Trade” is one that is becoming more and more frustrating to U.S. manufacturers. While the efforts of our European and Chinese partners (FEM IT and C.I.T.A) are actively promoting the elimination of tariffs on U.S. made lift trucks is very positive, the fact remains we are still paying 4.5% duty in Europe and 9.5% duty in China on our exports. Resolving these trade differences will have a positive impact on our businesses here in the US and globally.