Industry Analysis

Arrow denotes 12-month moving total/average direction

Retail Sales

  • US Total Retail Sales are approaching a transition to the accelerating growth phase of the business cycle
  • Retail Sales (excluding gas stations) are already in an accelerating growth trend, suggesting lessened travel and lower fuel prices are likely hindering the overall trend
  • An expected recovery trend for Employment starting in the next quarter will alleviate downward pressure on Retail Sales during 2021

Wholesale Trade

  • US Wholesale Trade in 2020 totaled $5.726 trillion, down 4.1% from the 2019 total
  • The Nondurable Goods segment ended the fourth quarter at 1.9% below the fourth quarter of 2019, while Durable Goods were up 3.9%
  • Upward momentum in US Capital Goods New Orders, up 2.0% in the fourth quarter, suggests the recent recovery in Wholesale Trade is sustainable

Auto Production

  • North America Light Vehicle Production in the fourth quarter was 1.3% above the same quarter of 2019
  • Production data suggests consumer preferences toward light trucks will persist while oil prices remain relatively low
  • A chip shortage is likely hindering Production, as chip producers are catering to the more profitable consumer electronics market

Manufacturing

  • US Total Manufacturing is on the cusp of a recovery
  • The Manufacturing Capacity Utilization Rate rose to the highest level since February 2020, a good signal for Manufacturing cyclical rise into at least mid-2021
  • The US ISM PMI (Purchasing Managers Index) suggests upward momentum in Manufacturing will persist throughout the second half of 2021

Rotary Rig

  • The US Rotary Rig Count ticked up in January but was still 53.4% below the January 2020 level
  • Upward momentum in the US economy will push up Oil and Natural Gas Prices in 2021, leading to a higher Rig Count
  • The US Natural Gas Rotary Rig Count is in a recovery trend, outperforming the overall Count

Capital Goods

  • December US Nondefense Capital Goods New Orders (excluding aircraft) were up 16.1% from the December 2019 level
  • Fourth-quarter US Defense Capital Goods New Orders were down 11.5% from the same quarter in 2019
  • Quarterly growth in US Corporate Profits for Domestic Nonfinancial Industries signals increased investment in New Orders is likely into mid-2021

Nonresidential Construction

  • Annual US Total Nonresidential Construction is virtually even with the year-ago level, but the market is contracting
  • Expect Nonresidential Construction to generally decline throughout 2021
  • Annual Private Construction is contracting (-3.0% year-over-year), while Public was up 4.3% from last year

Residential Construction

  • Quarterly US Total Residential Construction was up 20.3% from the year-ago level
  • US Single-Unit Housing Starts are accelerating and driving overall residential growth while the Multi-Unit market is contracting year-over-year
  • High US Personal Savings bode well for long-term investment in the residential markets as inventory levels remain historically low

Leading Indicator Snapshot

Key Takeaways

  • Ongoing rise in the majority of leading indicators suggests rise for the US industrial sector for at least the majority of 2021.
  • A tick-down in the US ISM PMI (Purchasing Managers Index) is not cause for concern, as this leading indicator is prone to dips amid overall rising trends.
  • The US government has now purchased a sufficient number of vaccine doses to inoculate every eligible individual in the country against COVID-19. This development may boost firms’ confidence and bodes well for rising activity this year.