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NIBCO Quarter Three Economic Forecast

US OUTLOOK FOR 2ND HALF - 2016

Moderate growth has been the story for the US economy so far in 2016 and we see conditions remaining mild, but positive, to start off the second half of the year. It is good news for professional contractors that new home construction permit activity is above year-ago levels for 46 out of 50 states. Recent Consumer Sentiment and Retail Sales reports further support that the consumer is being resilient and a leading force in bolstering the US economy despite all the headwinds from weak foreign markets and commodities. 

Home values are rising and this has historically translated into more renovations and improvements. Some leading indicators of home renovation and new construction activity such as the NAHB/Wells Fargo Housing Market Index are suggesting ongoing positive conditions later this year for the South, Midwest and West; the Northeast, however, is showing signs of weakness with the index falling to a 2 year low in May.

It is looking like 2016 will not be a strong year for most of the US economy, but good enough for professional contractors to be profitable if expectations are in check.

NORTHEAST REGIONAL OUTLOOK

Consumer activity has turned more positive in the Northeast. Down year-over-year in the early-spring, Spending is now growing at a 2.3% annual rate. While this is still weaker than other areas of the US and Canada, it is at least a move in the right direction and professional contractors should find the environment conducive to growth.

Consumer Spending

New York continues to underperform against its neighbors, up only 0.9% year-over-year. New Jersey’s 3.2% growth is the strongest the Garden State has seen since 2012.

New Housing Permits

A mild winter and early start to spring has given life to the construction markets in the Northeast, particularly along the coast. Leading indicators suggest this is likely a temporary boost and growth rates should cool later this year.

Written by: Andrew Duguay - Sr. Economist - Visit www.prevedere.com to learn more.