Valve Manufacturers Association Navigating the Crest

Transcription

1 Valve Manufacturers Association Navigating the Crest Alex Chausovsky Senior Analyst

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3 16 Forecast Results 2 Duration Accuracy US GDP % US Ind. Prod % Eur Ind. Prod % Canada Ind Prod % China Ind Prod % Retail Sales % Housing % Employment % ITR Economics provides the best economic intelligence to reduce risk and drive practical and profitable business decisions. 2 US Gross Domestic Product SAAR, Chained 9 $ US Gross Domestic Product Quarter-over-Quarter Growth Rate 3-Month Moving Average Rate-of-Change '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 ' 12-9 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 ' -9 $17. trillion Phase: B Quarter-over-Quarter: 2.2% ITR Outlook 17: 18: 19: 2.8% 1.6% 1.2% Source: BEA 3

4 Real Gross Domestic Product Republican Democrat GDP Rate-of-Change Source: BEA 4 US GDP by Consumption, 16 Government Spending 17% Business Investment 16% Personal Consumption 67% Percent Sources: BEA, ITR Economics

5 US Industrial Production Index 114 US Industrial Production Index 12-Month Moving Average Year-over-Year Growth Rate Rate-of-Change '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 ' '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19-15 Annual Trend: 14.7 Phase: B Year-over-Year:.8% ITR Outlook 17: 2.2% 18: 1.1% 19: -1.2% Source: FRB US IP 12 8 US Industrial Production to Gross Domestic Product Manufacturing ~ 76% of Industrial Production Mining ~ 14% of Industrial Production Utilities ~ 1% of Industrial production GDP % % -2.9% -5.3% GDP US IP -15.5% '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' Year-over-Year, Quarter-to-Quarter () Sources: FRB, BEA

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7 Business Cycles Phase A - Recovery Annual Sales are BELOW Year-Ago Levels, but the Rate-of-Decline is SLOWING. Phase B Accelerating Growth (Best) Annual Sales are ABOVE Year-Ago Levels, and are GROWING at a RAPID Pace. Phase C Slowing Growth (Caution) Annual Sales are ABOVE Year-Ago Levels, BUT the Rate-of-Growth is SLOWING Phase D - Recession Annual Sales are BELOW Year-Ago Levels, and are DECLINING at a RAPID Pace. 1 Leading Indicators Industry Data 18 May 1 May 11 Leading Indicator July Industry Data - ITR Leading Indicator - Monthly '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' The Indicator has a 12-month lead time to the Industry Data Rates-of-Change Sources: FRB, ITR Economics

8 US IP 15 US Industrial Production to ITR Leading Indicator Reported in ITR Trends Report ITR Advisor Indicator Indicator - Monthly US IP - '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' As seen in USIP Indicator - Monthly Sources: FRB, ITR Economics Purchasing Managers Index Leads US Economy by by 9-14 months 17.6% As seen in 1/12-5 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' 1/12 Rate-of-Change Source: Institute for Supply Management

9 US IP 1 5 US Industrial Production to US Total Industry Capacity Utilization Rate 1/12 Utilization Rate US IP - US IP Forecast Utilization Rate -3 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 Rates-of-Change Source: FRB 14 US Industrial Production Index to Wilshire Total Market Cap US IP 15 1 Wilshire US IP US IP Forecast Wilshire '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 Rates-of-Change Sources: FRB, Yahoo Finance -6 15

10 US IP ROC US Industrial Production Index to US Corporate Profits Profits ROC US IP ROC US IP ROC Forecast Profits ROC -15 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 Rates-of-Change Source: FRB, Bureau of Economic Analysis - -3 R-O-C Nondefense Capital Goods New Orders w/o Aircraft 6.%.7% MMT MMT 12MMT $ '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' Billions of Dollars Source: Census Bureau 17

11 US Nondefense Capital Goods New Orders (excl. Aircraft) to US Machinery Manufacturing Capacity Utilization New Orders 3 Utilization Rate 3 1/ New Orders - New Orders Forecast Utilization Rate -3 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 ' Rates-of-Change Sources: Census Bureau, FRB 18 Commodity Prices All Others Copper & Steel % Copper 32.2% Zinc 25.7% Alum 24.7% Lead 1.7% Tin 3.1% Steel '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' '22 Rates-of-Change Source: WSJ, London Metal Exchange, Metalprices.com, Steel Market Update -1 19

12 US Crude Oil Futures Commodity Prices MMA 3MMA Forecast ' '2 '4 '6 '8 '1 '12 '14 '16 '18 Dollars per Barrel Source: Wall Street Journal US Consumer Price Index to US Producer Price Index % 1.9% Consumer Price Producer Price '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' 1/12 Rate-of-Change Source: BLS -1 21

13 US Total Manufacturing Production Index Near Sourcing 2. Technology 3. Capital vs. Labor 4. Energy 5. Consumer base Record High Manufacturing 3 '72 '74 '76 '78 '8 '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' 12 = 1, Raw Data Source: FRB 3 16 Global Manufacturing Competitiveness Index 16 (Current) Rank Country Index Score 1 China 1. 2 United States Germany Japan South Korea United Kingdom Taiwan Mexico Canada Singapore 68.4 Talent is the most important driver of a country s ability to compete on the global stage (Projected) Rank Country Index Score 1 United States 1. 2 China Germany Japan India South Korea Mexico United Kingdom Taiwan Canada 68.1 Cost competitiveness is the second most influential driver Index Score: 1 = High, 1 = Low Source: Deloitte Touche Tohmatsu Ltd and US Council on Competitiveness 23

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15 Caterpillar 996g Wheel Loader Liebherr L576 Wheel Loader US-made German-made 14 Cost: $285, $335,65 $285, 15 Cost: $289,1 Difference: - $46,55 26 World Countries Industrial Production China accounts for approximately 14.9% of the world s economy. Europe accounts for approximately 24.5% of the world s economy. based on 16 IMF GDP statistics Year-Over-Year, Growth Rates % Source: FRB, Statistics Canada, The Economist, CEIC 27

16 Global Leading Indicators % 5.3% 4.5% EZ Comp PMI EU Manufacturing PMI JP Morgan Global MFG PMI '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 1/12 Rates-of-Change Source: Markit Economics -4-6 Disposable Personal Income %.9% '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' Rates-of-Change Source: BEA -4 29

17 US Personal Savings 3 R-O-C 13 MMA % -3.3% MMA 12MMA '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' Billions of Dollars Source: BEA 3 Delinquency Rates on Consumer Loans Percentage Lenders are increasing the amount of credit available for consumer installment loans. Consumer demand has risen for the second quarter in a row. Consumer Loan Delinquency Rate Consumer Credit Card Delinquency Rate Percentage Year Average Year Average MMA Data Trends Source: FRB 31

18 Percentage 15 US Auto Loan Delinquency Rate to Percent of US Student Loans Over 9 Days Delinquent to Real Estate Residential Loan Delinquency Rate Percentage Auto Student Residential Year Average 1 Year Average Year Average 6 3 '4 '6 '8 '1 '12 '14 '16 '18 ' 12 = 1 Sources: FRBNY, FRB Ongoing Concerns The Impact of a Strong Dollar Sustainability of Commodity Price Recovery Limited Growth in Emerging Economies Signs of Slightly Weakening US Consumer 33

19 Business Cycle Drivers Employment Wage Growth Your Markets Construction Interest Rates 34 US Private Sector Employment Private Sector Employment Growth Job Openings Involuntary Part Time Employment Quit Rate Rising 2.9% B 1.7% C -8.2% D Employment Mils of Jobs 88 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' Annual Data Trend Source: BLS 35

20 US Overall Wage Growth 5 4 Three-month moving average of median wage growth in the overall economy of the United States. Wages are pre-tax and exclude overtime, tips and commissions. The following are also excluded: top-coded individuals, individuals whose hourly pay is below the current federal minimum for tipbased workers, and individuals employed in agricultural occupations Raw Data '6 '8 '1 '12 '14 '16 '18 ' Percent Source: FRB Atlanta 36 US Metal Valve Production Index R-O-C MMA % 2.4% MMA 12MMA 17: 5.5% 18: 2.8% '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' = 1 Source: FRB 37

21 Production 3 US Metal Valve Production Index to ITR Leading Indicator Indicator Production - Production Forecast - Indicator - Monthly ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 ' Rates-of-Change Sources: FRB, ITR Economics Sales 3 US Metal Valve Production Index to US Nondefense Capital Goods New Orders (excluding aircraft) New Orders Production - Production Forecast New Orders New Orders Forecast -3 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 ' Rates-of-Change Sources: FRB, Census Bureau 39

22 US Food Production Index R-O-C 8 MMA % 2.8% MMA 12MMA '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' N311, 7 = 1 US Petroleum Refineries Production Index R-O-C % 2.2% MMA MMA 12MMA '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' N32411, 2 = 1 Source: FRB 41

23 US Chemicals & Products Production Index R-O-C 1 2.9%.5% MMA MMA 12MMA '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' 12 = 1 Source: FRB 8 US Iron & Steel Products Production Index R-O-C 75 NAICS 3311, 2 Production index for the manufacture of iron and steel products. 2.6% 1.8% MMA MMA 12MMA '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' 12 = 1 Source: FRB 43

24 Mining Production Index (excluding oil & gas) R-O-C 1 6.7% 3.7% MMA MMA 12MMA '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' 7 = 1 Source: FRB US Ship Production Index R-O-C 3 MMA % -5.8% MMA 12MMA '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' 12 = 1 Source: FRB 45

25 R-O-C 8 4 Electrical Utility Generation Production MMA MMA 12MMA -.6% -3.5% '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' 7 = 1 US Paper & Products Production Index R-O-C MMA MMA 12MMA '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' N3322; 2 = 1 Source: FRB

26 US Textiles and Products Production Index R-O-C 1 MMA % -1.5% MMT 12MMT '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' 12=1 Source: FRB 5 48 US Private Nonresidential Construction R-O-C 4 MMT % -1.4% MMT 12MMT '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' Billions of Dollars Source: Census Bureau 16 49

27 US Public Water Supply Facility Construction ROC 4 MMT % -11.8% MMT 12MMT '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' Billions of Dollars Source: Census Bureau 5 5 US Sewage and Waste Disposal Facility Construction ROC 3 MMT % -16.4% 3-3 3MMT 12MMT '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 ' Billions of Dollars Source: Census Bureau 51

28 6 5 FOMC Member Interest Rate Projections June 17 Fed Open Market Committee September Longer Run Source: FRB 52 Business Cycles Phase A - Recovery Phase B Accelerating Growth (Best) Phase C Slowing Growth (Caution) Phase D - Recession Annual Sales are BELOW Year-Ago Levels, but the Rate-of-Decline is SLOWING. Annual Sales are ABOVE Year-Ago Levels, and are GROWING at a RAPID Pace. Annual Sales are ABOVE Year-Ago Levels, BUT the Rate-of-Growth is SLOWING Annual Sales are BELOW Year-Ago Levels, and are DECLINING at a RAPID Pace.

29 ITR Management Objectives Actionable Takeaways 1. Budget for continued economic expansion through Be willing to take risks invest in your business over the next 2Q 3. Hire sales people to grow as the economy accelerates then slows 4. Add new products new ventures buck business cycle decline 5. Make sure your training and retention programs are top notch 6. Budget for higher wages and input costs Raise your prices! 54 ITR Economics provides the best economic intelligence to reduce risk and drive practical and profitable business decisions. STAY INFORMED! Receive monthly updates on the economy with the subject line VMA

30 ALEX CHAUSOVSKY Alex Chausovsky is an accomplished Speaker and Consultant at ITR Economics. He is a highly experienced market researcher and analyst with more than a decade of expertise in subjects that include macroeconomics, industrial manufacturing, energy efficiency, automation, and advanced technology trends. He has consulted and advised companies throughout the U.S., Europe, Brazil, China and Japan for the last fifteen years. REVIEWS As director of content for The Automation Conference, my main objective is to feature speakers who are both dynamic and relevant. That s why we ve featured Alex Chausovsky twice in the past four years. His presentations are on topic and captivating for the audience, due in large part to his clear and concise delivery of information. David Greenfield, Director of Content/Editor-in-Chief, PMMI Media Group/Automation World Alex is a consummate professional, whose presenting skills are both engaging and enjoyable. He is able to put across a great deal of detailed information in an enthusiastic, yet structured fashion. He is an eloquent speaker, whom I have had the pleasure in booking for several industry based conferences that I have staged. He brings authority and gravitas to any speaking engagement, and I would have no hesitation in recommending him to others. Andrew Castle, Managing Director, Touchwave Media SPEAKER PROFILE p e. itr@itreconomics.com ABOUT ALEX Alex regularly delivers keynote addresses at leading industry events to rave reviews. His charisma, engaging personality and refreshing demeanor on stage always surpass the audience s expectations. His extensive consulting expertise is greatly valued by management teams of companies both large and small. ITR Economics clients rely on his input when developing strategic plans for the future, as he helps them plan for risk conditions and find areas of opportunity. ALEX S PRESENTATION Alex s presentation covers a wide variety of topics including short-and long-term global economics forecasts, regional economic updates, and outlook on inflation, and the relationship of political events and economics growth. He details the economics indicators executives should follow and provides proven strategies for leveraging economic forecasts at the company level. BOOKING INFORMATION To book a speaker from ITR Economics, please call or itr@itreconomics.com. Visit and stay in touch with us through our blog and social media. ABOUT ITR ECONOMICS Founded in 1948, ITR Economics is the oldest, privately-held, continuously operating economic research & consulting firm in the United States. With a long-term 94.7% accuracy rating, ITR Economics has forecast major economic events, such as the 8 recession, well in advance and provides reliable industry and company forecasts tailored to client s needs. ITR Economics also offers economic webinars, subscription periodicals, consultative reports, and data collection services.

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