An Excerpt from ASIS

The following is a section of the Armada Strategic Intelligence System. The ASIS is based on a model we have been developing for the past year and one that has been tracking at 96% accuracy. If you would like to see the current issue in all its glory (complete with all those nifty charts and graphs), please feel free to sign up for the two month free trial at www.asisintelligence.com. There is no obligation whatsoever - we just want to know what you think of it

Industrial production for manufacturing (IPMAN) is the broadest measure of manufacturing in the industrial complex. It includes both consumer goods and durable products, with durable manufacturing accounting for 38.2% of total industrial production; and non-durable goods manufacturing being 35.4%.The ASIS Predictive Model for Industrial Production in Manufacturing shows the 18-month outlook until August of 2022.

Industrial production for manufacturing is still expected to continue in a steady growth curve until October of 2021, but that curve is somewhat slower to get underway. The latest model shows more variability starting in October of this year and continuing into August of 2022. The front side of the curve was little changed month-over-month.  This view strips out the utilities and mining portion of industrial production and focuses on just manufacturing activity. The forecast shows IPMAN continuing to outpace 2019 levels of output throughout the year and through August of 2022 at this stage.

Generally, the outlook for manufacturing is strong and could approach historical peak levels over the next 18-months based on the current forecast. Critical items that could reverse this forecast include: Congressional power now lies with roughly ten centrist senators and they have been exerting their influence already. They have tempered some early initiatives in the Senate and will help push a more bi-partisan agenda. This is reducing uncertainty; expectations of radical change are declining. Shifts in corporate sentiment have not manifested yet as changes in investment or spending. Money has been moving off the sidelines as there has been more optimistic news on the pandemic front. Caution is still evident, but there has been an increased desire to take advantage of growth opportunities.

The view of the past 6-years shows that IPMAN is finally beginning to return to a range of growth comparable to the 2014-2016 period. Based on current forecasts, IPMAN (the broadest category of industrial production for manufacturing) should return to peak 2018 levels of total output by mid-year based on current growth trends.

The major development to focus on is the relationship between consumer spending and product consumption. When consumers start to spend disposable income on services there will be less spent  Current models show that industrial production for manufacturing is expected to outperform the 20-year trend line (dashed blue line) and will outpace seasonality. If the pandemic impact lessens in Q2 and the job market continues to improve, consumer spending is expected to accelerate. on goods and could pull the forecast lower in the second half of the year.