Aerospace and Energy/Power Generation
Aerospace industrial production is poised for growth and energy-related manufacturing remains a strong part of the American economy.
Aerospace Production Poised for Growth
Aerospace industrial production grew at a decelerating rate throughout 2013, and that trend has carried into the first five months of this year. Currently, the annual rate of change in aerospace industrial is at 0.0 percent. But the trend in aerospace industrial production should start to turn around soon for two reasons. First, the rate of change in the month-over-month production data has grown in two of the last three months. This should start to show up in the annual data in the next couple of months. Second, system revenue passenger miles have experienced accelerate growth since early 2013. Based on past trends, aerospace industrial production should accelerate in the second half of 2014.
Our aerospace business index has reflected the decelerating growth trend of aerospace industrial production in the early part of this year. In fact, aerospace was the only end market that is tracked by our survey to contract. While our index shows production on a generally downward trend, new orders have grown the last two months. The rate of growth in backlogs has improved somewhat, which indicates that capacity utilization in the industry should improve soon. Hurting the industry at the moment is the rapid acceleration in material prices and contraction in prices received by manufacturers.