Aerospace and Automotive
Aerospace Production Likely to Grow Faster in 2014; Motor Vehicle and Parts Production at All-Time High
Aerospace Production Likely to Grow Faster in 2014
Orders for new planes at Boeing and Airbus were quite strong during the summer of 2013, but these orders have not yet translated into significant growth in aerospace industrial production. Production during 2013 was relatively flat compared to 2012. In fact, the month-over-month rate of change in production contracted at a very moderate rate from July to October. This resulted in decelerating growth in aerospace industrial production for the year.
However, this trend of decelerating growth in production looks like it should switch to accelerating growth in 2014. A good indicator for aerospace industrial production is system revenue passenger miles (SRPM), a measure that tracks the number of passengers on every flight in the U.S. and how far that flight travels. On average, changes in SRPM lead changes in aerospace industrial production by about one to two years. From May to August of 2013, the month-over-month rate of change in SRPM was growing at its fastest rate since the summer of 2011. Therefore, the annual rate of change (see chart) should grow faster in the latter part of 2013. And, if the historical pattern holds, then the rate of change in aerospace industrial production should start growing faster around the summer of 2014.