An economic forecast update webinar just held by NTEA (formerly the National Truck Equipment Assn.) laid out how key economic indicators portend a good year ahead— complete with pros and cons to keep in mind—for the work truck/trailer industry going into 2012.
Hosted by Stephen Latin-Kasper, the association’s director of market data & research, the presentation kicked off with a positive take on U.S. GDP. “While Bloomberg has predicted 2% growth on average [ahead of December] for 2012, NTEA expects it to go up to 2.5%”—given what’s expected from new economic results to be released by this week, said Latin-Kasper.
Right now, though, he pointed out that consumer spending is improving – up to a mid-60s score now—to a point far better than where it was a few months ago.
The uncertainty of the European debt crisis easing and the price of oil dropping at least for a time helped salve consumer concerns about the economy. The result, per Latin-Kasper, is “retail sales in coming months should improve with the economy.”
What’s more, he stressed emphatically, the highly reliable indicator of T-bill yield curves shows that “another recession is not imminent anytime soon. Rather, we are looking for continued growth in 2012.”
He said that optimism is founded on NTEA-tracked data of sales of work-truck chassis now moving through the manufacturing/distribution channels to reach end-user customers. Per NTEA’s data, work trucks as of September are showing a 27.9% gain in sales year to date. That figure includes strip, cutaway, conventional and LCOE vehicles.
Yet Latin-Kasper pointed out there’s “still manufacturing capacity left to fill in the industry over the next few years.”
He added that commercial chassis shipments are up 24.1% in 2011 and truck equipment shipments 21.6%.
Latin-Kasper also pointed to Polk data that shows that newly registered units of trucks and tractors hit 440,000 units as of September’s estimate for 2011. And he noted the biggest gains seen here are in Class 6 to 8 GVW vehicles.
Going into 2012, cautioned Latin-Kasper, sellers of work trucks and equipment will have to weigh both pro and con economic factors to truly stay on top of the marketplace.
The Pros:
- Leading indicator has risen for six consecutive months
- The COLAG is more positive than the leading indicator. COLAG is the ratio of the coincident U.S. economic indicator to the lagging U.S. economic indicator is a short-term leading indicator, typically providing about six months of lead-time at turning points in the work truck and trailer industry’s business cycle
- U.S. dollar is still relatively weak and therefore a boon to exports
- Pent-up consumer demand; November auto sales may have been “leading edge”
- Consumer savings rate is falling
- Consumers and businesses keep holding cash reserves
- Higher inflation could stimulate consumer spending
- Average age of trucks remains high
The Cons:
- Commercial & residential construction still stagnant
- State & local government spending constrained
- Labor market imbalance
- Political and 2012 election uncertainty
- Consumer confidence remains relatively low
- Eurozone issues not solved
Put it all together, and Latin-Kasper contends the data points to a “substantial increase” in work truck sales “not just in 2012 but out to 2016.”
