ACT Research is reporting that the commercial vehicle market outlook is unchanged from August. In its report, North American Commercial Vehicle Outlook, ACT officials say demand remains high for commercial vehicles, while supply chain and labor challenges continue to hamper production.
“We’re hardly at the ‘edge of the cliff’ stage when it comes to our outlook, but as the old investing maxim goes, 'don’t fight the Fed,'” said Kenny Vieth, ACT’s president and senior analyst.
When asked about Federal Reserve policy, Vieth said,
Vieth said it's important for the Federal Reserve to wait until inflation levels out before taking policy risks.
“We believe wage inflation needs to moderate before the Fed can begin turning away from tighter monetary policy," he said. "As long as the jobs report remains strong, wage inflation may prove stubbornly persistent–which could in turn lead to a more-aggressive-for-longer rate hikes.”
After studying U.S. Bureau of Labor Statistics (BLS) statistics, Vieth said wages are leveling out, as well.
“Encouragingly, there are signs the labor market is beginning to cool," he said. "Examining the monthly employment and wage data published by the BLS, job additions have been gradually trending lower through 2022 and the pace of wage appreciation is easing. That said, we suspect monthly job additions need to fall further to enable more lasting moderation in wage and core inflation.”
The report forecasts the future of the industry, looking at the next five years, with the objective of giving OEMs, Tier 1 and Tier 2 suppliers, and investment firms the information needed to plan accordingly for what is to come. The report provides an overview of the North American markets, as well as takes a deep dive into market activity to highlight orders, production and backlogs, shedding light on the forecast. Information included in this report covers forecasts and current market conditions for medium and heavy-duty trucks/tractors, and trailers, the macroeconomies of the US, Canada, and Mexico, publicly-traded carrier information, oil and fuel price impacts, freight and intermodal considerations, and regulatory environment impacts.
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Vieth also discussed the the potential impact to commercial vehicle markets, “We continue to see at least three factors mitigating a more severe downturn.”
He further explained, “Carrier profits and profitability were at record levels in 2021, and contract freight rates are still expected to rise by high single digits this year. Vehicle demand remains healthy, if moderating from here, with pent-up demand and low inventories expected to help mitigate the depth of the downturn. Finally, some prebuy activity is anticipated prior to the implementation of CARB’s Clean Truck mandate, entering a queue already filled with pent-up demand. States representing about 10% of industry demand will be adopting CARB mandates in both 2024 and 2025.”
