IHEA Monthly Economic Report: The Big 3 Plus 1

The monthly Industrial Heating Equipment Association (IHEA) Executive Economic Summary released in January takes a look at the 3 common problems for the economy and provides another sector that may be surprising player. Usually, inflation, recession, and supply chain have been considered the culprits for the economic downturns in past months. There is something else edging in as cause for concern: the worker shortage. Specifically, the looming problem that the Boomer generation is retiring.

By 2030, the report projects, every worker of this generation will have reached retirement age. It is forecasted: "These people will be very hard to replace, and it will be expensive." Worker shortages have been discussed before, but now the study is showing that things are at "crises level."

"Remarkably stable" due, in part to "expansion of capital spending"
Source: IHEA

The 10 economic indices have all shown a drop except two: Durable Goods and Metal Pricing. Metal prices are remaining stable even as there are signs of reducing demand. The report credits this to companies thinking there will be a slowdown this year. Global events do make copper rather volatile, but nickel and aluminum are holding steady.

"The metal markets have been stabilizing to a degree."
Source: IHEA

All of these indices are slowing down: New Auto Sales, New Home Start, Steel Consumption, Industrial Capacity Utilization, Purchasing Managers Index, Capital Expenditure, Factory Orders, and Transportation Activity. It's difficult to pin just a few reasons for this, but supply and demand issues, high interest rates, and high prices overall have consumers hanging on to their money if they can.

Some supply chain resolution but "consumer demand is frequently frustrated by the lack of the desired vehicle."
Source: IHEA

In the automotive arena, heat treaters can find measures of security in knowing production is still expanding.

"The estimate is that another 5 million homes are needed."
Source: IHEA

Yes, the numbers are down, but overall there is a great need yet for housing. Multi-family homes see numbers still up by 12%, so that reflects well for heat treaters providing construction needs.

Some slowing in the steel sector
Source: IHEA

The report on steel consumption shows decline in the three major "drivers" for the industry: commercial construction, vehicle manufacturing, and the oil and gas business.

2023, it would seem, is going to see a lot of spending on labor. There is hope even while seeing numbers drop, and it is possible that the nation is moving into a better time. The claim is that the "recession threat [is fading]," and supply chain circumstances are improving with China and elsewhere.

Check out the full report to see specific index growth and analysis which is available to IHEA member companies. For membership information, and a full copy of the 11-page report, contact Anne Goyer, executive director of IHEA. Email Anne by clicking here.