Analyst Urges Caution In “Mid-Term Economic Outlook” For U.S Trucking Market
Columbus, Indiana – According to ACT Research’s (ACT) latest release of the North American Commercial Vehicle OUTLOOK, yellow lights continue to flash for the US economy, and by extension for the North American commercial vehicle industry.
“While the outlook has less of an orange tinge, sufficient caution flags remain to keep the yellow light burning regarding the near to mid-term economic outlook,” said Kenny Vieth, ACT’s President and Senior Analyst. He elaborated, “While we’ve seen improvement in petroleum prices, equity valuations, and a monetary policy pause, we remain cautious regarding indicators like a flat yield curve, quantitative tightening, potential fallout from tariffs and trade wars, as well as the global economic slowdown.”
Regarding heavy vehicle demand, Vieth noted, “ACT’s Tractor Dashboard posted a third consecutive negative five reading in December, suggesting demand will increasingly come under pressure in the first half of 2019.”
This new warning comes on the heels of an FTR preliminary North American Class 8 orders report for January 2019 showing a 26% M/M drop. The order total was the lowest since October 2016 at 15,600 units, while ACT Research tallied the preliminary number at 15,800.
This year’s January order activity was down 67% versus last year and is the worst for the month since 2010. The low Class 8 order number was not entirely unexpected though, as the great majority of fleets already have all their orders in for 2019 and don’t need to place any more orders for a while.
Despite Vieth’s cautious tenor, he noted that the heavy commercial vehicle market continues to benefit from a still-broad spectrum of supply and demand-side triggers. “The rolling-over of ACT’s Dashboard guidance suggests order weakness will transition from today’s ‘too much backlog’ to an equipment supply-freight demand imbalance in the near future.”
Regarding ACT’s medium duty forecasts, Vieth said, “Preliminary January net orders were in sync with the current trend, with average orders per month for the past six months moderating from the strong upward pressure they exerted on the forecast in the first half of 2018.”
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