ACT Research: Interest Rate Hikes Persist, Optimism for Taming Inflation Wanes

According to ACT Research’s (ACT) latest State of the Industry: NA Classes 5-8 report, persistent inflation, continued interest rate hikes, and the potential for recession remain overarching themes. Although themes remain the same as last month, the biggest change is in ACT’s declining optimism that inflation can be easily tamed.

ACT’s State of the Industry: NA Classes 5-8 report provides a monthly look at the current production, sales, and general state of the on-road heavy and medium duty commercial vehicle markets in North America. It differentiates market indicators by Class 5, Classes 6-7 chassis and Class 8 trucks and tractors, detailing measures such as backlog, build, inventory, new orders, cancellations, net orders, and retail sales. Additionally, Class 5 and Classes 6-7 are segmented by trucks, buses, RVs, and step van configurations, while Class 8 is segmented by trucks and tractors with and without sleeper cabs. This report includes a six-month industry build plan, backlog timing analysis, historical data from 1996 to the present in spreadsheet format, and a ready-to-use graph package. A first-look at preliminary net orders is also published in conjunction with this report.

On the bright side, supply-chain disruptions continue to moderate. A modest 2023 recession centered on Q1’23 remains our base case, with a more material freight downturn having already started in Q2’22 and beginning to contract y/y in Q4’22. -Eric Crawford,  Vice President & Sr. AnalystAccording to Eric Crawford, ACT Research’s Vice President, Senior Analyst, “On the bright side, supply-chain disruptions continue to moderate. A modest 2023 recession centered on Q1’23 remains our base case, with a more material freight downturn having already started in Q2’22 and beginning to contract y/y in Q4’22.”

When asked about inflation, Crawford explained, “With core inflation defying expectations, we take the Fed at its Chairman’s word that the institution will take 'forceful and rapid steps to moderate demand.' Consensus expectations are that the Fed will add another 75bps of rate tightening this week.” Regarding August order activity, he commented, “New order activity remained at modest levels in August, if above recent activity levels, as the OEMs slowly begin to open their 2023 order books. The May-July period is the weakest period of the year for new order activity; for Class 8, weakness typically extends through September.”

ACT Research is recognized as the leading publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies. ACT Research is a contributor to the Blue Chip Economic Indicators and a member of the Wall Street Journal Economic Forecast Panel. ACT Research executives have received peer recognition, including election to the Board of Directors of the National Association for Business Economics, appointment as Consulting Economist to the National Private Truck Council, and the Lawrence R. Klein Award for Blue Chip Economic Indicators’ Most Accurate Economic Forecast over a four-year period. ACT Research senior staff members have earned accolades including Chicago Federal Reserve Automotive Outlook Symposium Best Overall Forecast, Wall Street Journal Top Economic Outlook, and USA Today Top 10 Economic Forecasters. More information can be found at www.actresearch.net.

ACT’s 68th Seminar is scheduled for February 21-23, 2023. Look for more details on this event over the coming months and save the date for February’s event. When details are available, they may be found at www.actresearch.net.

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