COLUMBUS, Ind. — Moderating core personal consumption expenditures, slowing jobs growth and decelerating wage inflation indicate the Fed’s campaign to bring inflation under control may be bearing fruit — and the need for further interest rate increases may be limited, according to ACT Research‘s latest release of the North American Commercial Vehicle OUTLOOK.
“The critical factor in forecasting 2023 is identifying the point at which lower freight volumes and rates, coupled with higher borrowing costs compress carrier profits sufficiently to end the cycle,” According to Kenny Vieth, ACT president and senior analyst, said. “Our current thinking is the negatives begin to weigh on orders as soon as 1H’23, and more meaningfully by 2H’23.”
He added that with healthy backlogs, early 2023 carrier profitability strength, and the potential for a CARB-induced prebuy in California, there is a compelling case to be made for commercial truck production volumes to be sustained at end-of-2022 levels through all of 2023.
“Reflecting softer macro and freight trends, ACT’s forward-looking Tractor Dashboard remained in negative territory in November. While the dashboard has signaled incoming softness since March, the low single-digit negative readings seen in 2022 are mild, relative to the double-digit negative prints witnessed in late 2015 and early 2019.” Vieth said. “Part of the ‘strength’ in the current environment relates to the supply constraints that limited the industry’s ability to build all the trucks that would otherwise have been produced in 2021 and 2022.”
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