Year End Predictions for Manufacturing

4th quarter predictions

2018 has been an incredibly strong year for much of the manufacturing arena with the country’s gross domestic product expanding at a 4.2% rate in the second quarter, nearly double that of first quarter.  The recent tax cuts have resulted in higher than anticipated after-tax profits for most companies and an expectation for profit growth to continue through the end of the year.  Interestingly, acquisition of business equipment grew at the slowest rate in the last 18 months.  Many business owners appear to be holding back on capital equipment investments out of fear of a potentially larger trade war in the future.  While there is certainly concern about slowdowns in international trade, it’s expected that these will be minor and affect fewer than anticipated industries.

2019 is expected to see an increase in compensation for workers as the labor market gets tighter and tighter and employers are forced to increase wages to attract talent. However this is not expected to eliminate profit growth entirely as profits will still exceed wage increases.  The other factor analysts anticipate will affect 2019 numbers is the increase in costs to acquire materials resulting from recent tariffs.  This will hit some industries harder than others and could cause next year’s numbers to flat line.  One question yet to be answered is how tax cuts for individuals will affect spending through the holiday season.  While the President believes it will have a substantial impact, many analysts aren’t so sure.  The majority of the tax benefits will be felt by wealthier American’s and historically that sector tends to save that money rather than increase their spending.  Time will tell how the individual response impacts the markets through 4th quarter.

While oil demand decreases after the summer rush it’s still expected that prices will stay high as supply from Iran dwindles. These oil prices will affect everyone with increases in cost of delivering goods, increased costs for airline travel, and increases in daily cost of doing business.  It does appear that the President has come up with a way of preserving the North American Free Trade Agreement between the U.S., Canada and Mexico.   There is an expectation that this will get finalized in the 4th quarter which should help to further stabilize the U.S. market and provide other trade options for U.S. businesses looking to acquire goods and services separate from the tariffs and trade wars going on with China.

Most analyst anticipate a strong finish to 2018 with growth expected throughout 2019 as well, it’s a great time to be in American manufacturing.

 

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This entry was posted in 3D Printing, 5-Axis Machines, Machining Applications, Manufacturing, Waterjet Cutting Machines and tagged , , , , . Bookmark the permalink.

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