Industry Analysis

Arrow denotes 12-month moving total/average direction

Retail Sales

  • US Total Retail Sales in the three months through October were 4.8% above the same three months of 2019
  • Retail Sales of Non-Store Retailers remain an area of relative opportunity, up 27.1% over that same time period
  • Expect annual Total Retail Sales to reach record highs by the middle of next year

Wholesale Trade

  • In September, monthly US Total Wholesale Trade was above the year-ago level for the first time since February
  • Upward momentum in US Real Gross Domestic Product bodes well for Wholesale Trade moving into next year
  • The Durable Goods component of Wholesale Trade is currently outperforming Nondurable Goods, but both will decline into early next year before a rising trend returns

Auto Production

  • Third-quarter North America Light Vehicle Production was virtually even with the third quarter of 2019
  • Monthly Retail Sales of New Car Dealers are double digits above the year-ago level
  • Annual Production is unlikely to sustainably rise until early next year and will remain below pre-pandemic levels through 2021

Manufacturing

  • US Total Manufacturing Production averaged 5.1% below the year-ago level for the three months through October
  • Leading indicators including the ITR Leading Indicatorâ„¢ suggest early-2021 cyclical rise for Manufacturing
  • General rise in many commodity prices, including copper, oil, steel, and aluminum, will make manufacturing more expensive in the coming quarters; plan accordingly

Rotary Rig

  • The US Rotary Rig Count averaged 262 for the three months through October, 70.3% below the same three months last year
  • Oil Prices ended October at $35.72 per barrel bu t have since jumped back above $40
  • Expect quarterly Oil Prices to reach above $50 by the middle of next year as demand rises

Capital Goods

  • US Nondefense Capital Goods (excluding aircraft) in the third quarter were 3.6% above the same quarter last year
  • Defense Capital Goods were 4.7% below last year in the third quarter; we expect annual Defense Capital Goods to reach record highs next year
  • Annual Nondefense Capital Goods will enter a sustainable rising trend early next year

Nonresidential Construction

  • Third-quarter US Total Nonresidential Construction was 2.1% below the third quarter of last year
  • Most Nonresidential Construction segments are contracting, but US Private Warehouse Construction, the notable exception, is 14.6% above the year-ago level
  • The recovery in US Real Gross Domestic Product aligns well with our expectation for Nonresidential Construction business cycle rise in the latter half of next year

Residential Construction

  • Third-quarter US Total Residential Construction was at $166.6 billion, 8.0% above the third quarter of 2019
  • October was the first month since 2007 to post more than 100 thousand Single-Unit Housing Starts, coming in 31.5% above October 2019; Single-Unit Starts will be an area of relative opportunity this cycle
  • In contrast, Multi-Unit Housing Starts were 16.9% below the year-ago level in the three months through October

Leading Indicator Snapshot

Key Takeaways

  • The ITR Retail Sales Leading Indicatorâ„¢ suggests sustainable rise in Retail Sales will begin in the first half of next year
  • Leading indicators for the industrial economy are largely in consensus and suggest that US Industrial Production will enter a business cycle rising trend in the first half of next year
  • As COVID-19 numbers reach record highs, the risk of statewide shutdowns increases, which poses a downside risk to the indicators and our outlook for Industrial Production