If we had to choose one word to characterize our current global industrial climate, it just might be “anxiety.” There’s daily trepidation about whether the U.S. economy is being hurled into a recession and if inflationary pressures are taking enough grip to make it so. But the Federal Reserve is hesitant to say so and has put the brakes on the U.S. economy with increases in interest rates.
But when it comes to industrial sectors, everyone is searching for some silver lining, and there may be some. As supply chain woes still haunt an overall outlook, material price escalations and long lead times for key construction components have begun to improve, according to some reports.
Gilbane, a construction and facility management company, released its Construction Market Conditions Report for the second half of 2022. The report notes that commodity prices, as well as equities and bonds, have been moving lower, and predicts further decreases in the second half of 2022 due to tighter financial markets, slower growth and continued improvement of supply bottlenecks.
Regarding commodity price trends, Jay Pendergrass, Gilbane’s vice president of supply chain, stated, “We have seen measures of supplier performance, delivery times, backlogs and shortages are showing some improvement.” He highlighted a softening of commodity prices, including for copper, steel and lumber.
According to the Institute for Supply Management (ISM)’s July 2022 Manufacturing Report On Business, manufacturing production is growing, albeit—not aways lower than in the last few months, but still growing overall.
According to the ISM report, economic activity in the manufacturing sector grew in July, with the overall economy achieving a 26th consecutive month of growth.
Within the report, ISM’s monthly commodity outlook indicated some rising in price, but also some declines in these commodities: aluminum, aluminum products, copper, diesel fuel, lumber, natural gas, plastic resins, steel, steel (carbon), steel (hot rolled) and steel products.
There’s reason to be bullish, according to Pendergrass: “Nearing the end of Q2 22, we are seeing some changes in the market as equities, bonds, and commodity prices have all been moving lower as prospects for global growth and higher interest rates have all been established.”