Economic Watch: Manufacturing Starts Year Strong, Housing Best in Years

The U.S. manufacturing sector had a solid start to 2017, with overall operating conditions improving at the quickest pace for nearly two years, according to preliminary report issued Tuesday by financial information services provider IHS Markit. A separate report shows existing home sales closed out 2016 as the best year in a decade.

IHS Markit's January Flash U.S. Manufacturing Purchasing Managers' Index registered 55.1, up from a final reading of 54.3 in December, to signal a marked upturn in the health of the sector that was the strongest since March 2015. A reading over 50 indicates growth in the manufacturing sector.

The solid improvement in business conditions was largely driven by sharper increases in output and new orders, which rose at the fastest rates in 22 and 28 months, respectively. At the same time, companies raised their purchasing activity at the steepest rate since early 2015 and increased their payrolls further in order to meet greater production requirements.

Positive expectations around the demand outlook were highlighted by further increases in stocks of purchased items and finished goods, with the latter increasing at the quickest pace since early 2007. Optimism around the 12-month outlook for production also improved at the start of the year and reached its highest level since March 2016.

U.S. manufacturers reported increased production for the eighth month running in January. Furthermore, the rate of expansion picked up to its sharpest since March 2015. Higher output was overwhelmingly linked by respondents to greater inflows of new work, with latest data showing the steepest increase in total new orders for 28 months. The upturn in new business appeared to be led by stronger domestic demand, as new export work rose only slightly at the start of 2017, as has been the case in each of the past four months.

Manufacturing employment continued to increase ...Read the rest of this story

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Economic Outlook for 2017: More of the Same?

LAS VEGAS -- The outlook for the U.S. economy is expansion at a pace around trend through 2019, according to Bill Strauss, senior economist and economic advisor, Federal Reserve Bank of Chicago.

Speaking at Heavy Duty Aftermarket Dialogue ahead of Heavy Duty Aftermarket Week, he said he also expects:

Strauss began his presentation by reviewing what he said at HDAD in 2016. He said he was close on three of his four conclusions. But the fourth, manufacturing output, which he previously had expected to grow at a rate slightly below trend in 2016, actually saw no growth. He attributed this to the value of the U.S. dollar, which caused exports to suffer because the cost of U.S. manufactured goods was higher in foreign markets.

Going forward, he said, “I do not know the impact the new administration will have on the economy. There are lots of uncertainties.” He added that the Federal Reserve does not make assumptions when setting its policies but rather relies on data, so the Fed will have to wait to see what changes are made by the new administration before making any moves of its own.

He did say that a group made up of 50 blue chip companies has not altered its outlook on the economy, predicting 2017 to be a little better than 2016 but not substantially better. “However, there is upside risk that economic growth numbers could be higher,” Strauss said.

According to Strauss, the Federal Open Market Committee expects GDP to grow at around trend over the next three years. He is expecting final numbers for 2016 ...Read the rest of this story

Canada's heavy-duty aftermarket transforming

Accuride develops 40-lb. aluminum wheel

LAS VEGAS. At just over 40 lbs., the Quantum 99 alloy aluminum wheel for heavy-duty truck applications is 20z% stronger than the company's previous aluminum wheel while weighing 5 lbs. or 11% less, according to Accuride Corp.

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Sustained slow growth ahead for economy and trucking

LAS VEGAS. While “no one knows what the new administration will mean for the economy and growth,” the Federal Reserve Bank of Chicago is sticking with its pre-presidential-election view that the economy will grow a bit better in 2017, though that growth won't be substantial.

“We haven't altered our forecast materially, but we do see an upside risk in economic growth,” said Chicago Fed sr. economist and economic advisor Bill Strauss. “There's a better chance of it being stronger than of it being weaker.”

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Diesel Prices Fall for Second Week in a Row

Source: EIA

Diesel prices in the U.S. were down for the second week in a row, taking back some of the gains from the start of he year, according to the latest numbers from the Energy Department.

The average price of on-highway diesel fuel fell by 1.6 cents last week, settling at $2.569 per gallon at the pump. That price is still much higher than it was at this point last year, gaining nearly 50 cents compared to 2016.

The drop in average fuel prices was driven mostly by a 2.9-cent decrease in the Midwest, topping all other major regions in the U.S. New England was nearly flat over the same period, losing 0.1 cents for the week.

The average price of regular gasoline was down even more last week, dropping 3.2 cents to $2.326 per gallon. The price of gasoline is currently 47 cents more expensive than it was in the same week a year ago.

By region, the largest decrease in prices occurred in the Midwest, where prices fell by 6.4 cents per gallon. The smallest drop was on the West Coast, where gas prices fell by an average 0.7 cents.

Fuel prices seem to be mirroring the crude oil market, as the price of a barrel of crude oil was down in trading to start the week. Oil prices were trending upward to start the year in anticipation of a deal between OPEC countries to freeze or cut oil production. However, the deal has also reignited U.S. crude oil production, which has subdued any gains, according to a MarketWatch report.

OPEC originally agreed to cut oil production to meet lower global demand and drive up crude oil prices. However, the resulting increase in prices made the U.S. oil industry, particularly the shale oil portion, profitable enough to ramp up ...Read the rest of this story