Despite all the talk about recession it might not be time for business owners to start battening down the hatches thanks to these six indicators

With all of the recent talk about recession, is it time now for a business owner to start battening down the hatches, cutting overhead, delaying expansion plans and trimming investments? As in any economy, there are always conflicting signs. But according to these six indicators, my answer is: no?

The Citizens Business Conditions Index is strong

Published just this week, this new index which is derived from the banks proprietary corporate and public data about business growth and employment across the country, including factors such as revenue, manufacturing volumes and wages shows that the business climate in the US remains strong with many companies in growth mode despite recent global economic headwinds.

The chemical activity barometer is at its highest level since 1948

Even though still historically high, both durable goods and industrial production numbers have dipped recently, with some economists saying that the US manufacturing sector is in a technical recession. Thats the bad news. The good news is that the American Chemistry Councils monthly chemical activity barometer which measures revenues, profits and other metrics in an industry which underlies all manufacturing is at its highest level since the barometer started in 1948. This data set is the only timely source of market trends for 28 market and functional specialty chemical segments, the council said in a recent press release. Chemistry directly touches over 96% of all manufactured goods, and trends in these specialty chemical segments provide a detailed view of trends in manufacturing.

Retail sales surged

Consumer spending surged last month, coming in at almost twice what was forecast. A strong jobs market, easy credit, low inflation and interest rates as well as rising wages are credited for the increase not to mention the online efforts of big box retailers such as Walmart and Target to counter Amazons growth. As long as consumers keep spending, American companies will need to keep producing and selling.

Small business confidence rose to an almost all-time high

The National Federation of Independent Business (NFIB) monthly small business confidence index rose yet again, shrugging of recent declines and flirting with its all-time high. Contrary to the narrative about impending economic doom, the small business sector remains exceptional, said William Dunkelberg, NFIBs chief economist. This months index is a confirmation that small business owners remain very optimistic about the economy but are being hamstrung by not finding the workers they need.

Texas, New York and Philly manufacturing is up

All three regions reported increases in their manufacturing sectors during the most recent month. The Philly Fed said that future activity indexes remained positive, suggesting continued optimism about growth for the next six months. In the New York region, new orders increased after declining for the prior two months, and shipments continued to expand. The Dallas Federal Reserve said that its production index, a key measure of state manufacturing conditions, shot up nine points to 17.9, its highest reading in nearly a year.

Truck tonnage surged in July

The American Trucking Associations monthly index of shipping revealed its highest measurement since 2015 and compared with July 2018, the index surged 7.3% to its largest year-over-year gain since April.

Heres the usual disclaimer: No one knows when the next recession will be, certain challenges (ie China) could impact economic growth, other metrics like a slip in durable goods and industrial production numbers, a softening of economic growth and a decline in home sales could spell trouble.

But until most of the big metrics are regularly pointing towards a downturn theres probably not a downturn in the near future. If youre running a business, I see no reason to be overly concerned for now.

Source: http://www.theguardian.com/us

 

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