Machinery/Equipment and Automotive
Machinery/equipment likely to contract this year; automotive strong, but slowing.
Machinery/Equipment Market Likely to Contract in 2016
Since the end of 2010, the machinery and equipment market has grown quite significantly, albeit with a brief period of contraction from mid-2014 to mid-2015. However, it seems that machinery and equipment production will likely contract this year. This is based on the trend in real durable goods new orders, which is an excellent leading indicator (by about six months) of machinery and equipment production.
Real durable goods new orders in September 2015 were $246,098 million, down 4.7 percent compared with one year earlier. September was the eighth month in a row that the month-over-month rate of change contracted. The annual rate of change, now -4.2 percent, contracted for the third month in a row at an accelerating rate, and, based on the recent trend in new orders, the annual rate of change will contract even faster in upcoming months.
In addition to these trends, the Gardner Business Index (GBI): Machinery & Equipment shows that new orders and production have contracted at significant rates for seven and eight months, respectively. And because new orders have been relatively weaker than production, backlogs within the industry have continued to contract at an accelerating rate. All of these trends will decrease the demand for plastic components, and consequently molds, needed for machinery and equipment.