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NIBCO Second Quarter Economic Update

 

US Outlook for Mid-2016

Our leading indicators are suggesting mild growth for the US economy in the months ahead. The outlook is based on a blend of positive and negative factors likely to impact professional contractors. On the positive side, mild weather, low interest rates and high employment have lifted home building in the winter months and most are looking at an early spring construction season. However, the broader consumer is starting to show some hesitancy to keep increasing spending on discretionary items. Consumer surveys show sentiment has been down in each of the past three months. Retail Sales have noticeably softened across the US this winter, and not just in unusually-mild winter areas like the Northeast and Plains & Rockies. The volatile stock market is likely playing a factor in all this nervousness. It’s a mixed bag of economic factors right now. For professional contractors, this means growth and profitability are achievable in 2016, so long as your expectations are in check. Incomes are still rising, but consumers tend to be more price and value conscious during times of economic deceleration.

Northeast Regional Outlook

Consumer Spending has been decelerating in the Northeast since mid-2015 and has now dipped negative, to -0.5% below year-ago levels. The mild winter has been good for some, bad for others. We expect some recovery in the coming months and a return to growth, but it will be mild.

Part of the soft numbers across the US is a simple lack of inflationary pressures. People are spending less because some prices are falling.

A mild winter has helped to propel new construction activity relative to last year across the northern US. However, take caution if you are selling services into Canada’s housing construction market.

Written by Andrew Duguay - Sr Economist - Visit www.prevederesoftware.com to learn more. Click HERE to download a PDF version of this report.

 

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