Alan Beaulieu 2017-10-03 01:57:55
A BEND IN THE ROAD I would bet that most, if not all, readers are having a good year. And why not? The consumer is spending, jobs are being created, and full-time wages are going up at the highest pace in eight years. More consumers with more money to spend is good news for STAFDA members, and we expect the positive momentum to last through the rest of 2017 and into the first half 2018. People are buying more and more hand tools. Through the 12 months ending in June 2017, $23.785 billion has been spent on hand tools. That is a record-high level of spending and there is more to come. Spending in the second quarter of 2017 came in 6.6 percent ahead of the second quarter of 2016, and our internal checking points portend more record-high levels of spending through the rest of this year. The demand is there, and it is up to readers to position both the company and their products to take maximum advantage of the positive economic environment. We will have more indications of a slowing rate of rise in 2018 when we meet in Austin in November. Retail Sales overall (excluding gasoline) is a healthy 3.5 perent ahead of this time last year on a 12-month year-over-year basis. The seasonal rise is typical and all internal indications are that consumers will be buying more in the coming months, resulting in more growth in the US economy. Most of the country is in a positive position with high levels of activity. The Northeast is the notable exception with Single-Family housing starts below year-ago levels and a clear contraction in place. The 12-month growth rate (a 12-month year-over-year comparison) is going to get more negative through the near term. Less obvious is the fact that the South is posting a slowing rate of rise in the data trend. The pace of activity in the South is slowing and may be a defining characteristic through at least the near term. The National Remodeling Market Index stands at 54.67, which is good news for that market segment. Tools and fasteners will be in demand for improving, expanding and building homes in every region, with the exception of New England. Existing homes are selling fast, with home sales in regions coming in at the highest levels we have seen in at least nine years. However, the pace at which existing homes are selling is slowing in the Northeast and the Midwest. The growth rate in the Midwest is the slowest we have seen in two years. The West is currently booming, with existing home sales coming in 4.0% above this time last year (12-month basis) and an acceleration indicated in the amount of homes sold. Existing homes sold make for fertile ground for renovations and thus for tool and fastener sales. There are some economic clouds forming, and I expect these will be much more fully defined when we meet in Austin. At the moment, the ITR Leading Indicator, the Institute for Supply Management’s Purchasing Managers’ Index, and the Total Capacity Utilization Rate are throwing off some potential early signs of the projected slowdown in 2018, which may lead to a mild recession in some markets in 2019. We may not be able to change the wind, but we can adjust the sails. We will talk more about what to do to prepare as we meet in November. WHEN AND WHERE Renowned economist Alan Beaulieu, president of the Institute for Trend Research, will present his annual economic update and 2018 preview for STAFDA members on Tuesday, November 14 from 8:00 to 10:00 a.m.
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