Positive signs in the manufacturing sector
“We’re into a good period of time the last few months…Consumer sentiment has been positive for some time. Spending has been pushing up since the start of the year and will provide for a good bounce going into the rest of the year,” said Jack Kleinhenz, chief economist with the National Retail Federation, adding he is expecting “a solid holiday season.”
Growing consumer confidence is particularly important because consumer spending plays such a key role in the US economy (considerably larger than it does in Canada). US GDP since the end of the recession has averaged around 2.5%. More than half of that – 1.5% — has been driven by consumer spending, according to Kleinhenz.
E-commerce is also becoming an increasingly important element of retail sales with e-commerce related purchases approaching 6.5% of total sales.
There are also positive signs in the manufacturing sector. Chad Moutray, chief economist with the National Association of Manufacturers, said 87% of his association’s members are positive in their business outlook, according to a recent survey.
“That’s the most positive we’ve seen them in some time. It certainly looks like we are moving in the right direction,” Moutray said. “Manufacturers are optimistic for the next six months to a year.”
Both demand and output started making significant gains as of the third quarter of 2013 and rebounded this summer following weather-related contractions in the first quarter of 2014.
The growth experienced in the retail and manufacturing sectors is certainly being revealed in for-hire trucking related indices. Truckload freight loads, after a weather-related 0.3% drop during the first quarter, posted a 3.7% gain in the second quarter and a 3.8% gain in the third quarter. In comparison, they grew 1.5% in 2013. Taking a more granular look, ATA research shows year-over-year loads growth for the for-hire dry van sector at 2.4% year-to-date. The temperature controlled sector’s TL loads are growing at 3.2% year-over-year while tank truck loads are growing at 1.8%. The only negative is the flatbed sector which is showing a 4.3% decline year-over-year YTD. However the flatbed sector was among the first to benefit from the resurgence of the US housing market and the pace in loads activity may be difficult to maintain long term.