A downturn in the housing market is expected to result in slower economic growth, according to the AMCA.
The Air Movement and Control Association recently released a third-quarter forecast for 2007 authored by consulting economist Hans Zigmund.
The air movement and control industry’s principal economic indicators continue to provide mixed results contributing toward a continued feeling of uncertainty about the economy’s performance in the medium term.
The AMCA said that the housing markets continue to struggle, citing the U.S. Census Bureau. The bureau reported that February new-housing starts and building permits were down by 27 percent. Housing starts historically provide a strong indicator of future industry activity.
However, industrial capacity rates continue to remain high. The June Capacity Utilization Index reported by the Federal Reserve Board was 81.69. This is only down slightly from 82.25 in June 2006. The AMCA said that high rates of capacity utilization are generally a good sign for manufacturers of air-movement and control products whose primary product lines are industrial.
The AMCA reported that nonresidential investment continues to outperform expectations. Total nonresidential construction put in place for June is up 11.3 percent against June 2006. The average growth rate for 2007 is 11.7 percent versus 2006. The strength of nonresidential construction is the primary contributor to an upward revision of the 2007 growth estimate.
The association also reported that shipments and bookings have outpaced expectations throughout the first half of 2007. Both the strength of nonresidential construction and the continuing upward pressure on the price of steel and other inputs in the production process continue to cause the value of non-inflation adjusted shipments and bookings to climb.
Since rising prices of production inputs are not likely to subside and all indications are that nonresidential construction should remain strong the remainder of the year, the forecasts for 2007 have been revised upward.
Down housing market to slow economic growth, says AMCA
November 1, 2007