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Forecast for the METAL TREATING INSTITUTE

Billings slip 6.1% in 1st quarter of 2015 compared with 4th quarter

The MTI index of billings for the first quarter of 2015 totaled 352.4 (index number based on 2007 = 1200) compared to the fourth quarter total of 386.0. When adjusted for seasonal variations* this is a loss of 6.1%. The first quarter was 4.1% above the year-ago first quarter and the 12-month total was 5.9% above the previous 12 months. This will be the current cyclical high for the yr/yr growth curve.

*We base seasonality variations on the annual share per quarter over a span of years, currently from 2008-2014. For MTI, calculations lead us to expect 24.4% of billings in the 1st quarter, then 25.3%, 25.2%, and 25.1%.

Forecast

The economy is in a typical period of mild cyclical ups and downs between recessions, not true business cycle highs and lows. We reached a mini-high in the first quarter of 2015. Economic data has now started to grow at a slower rate, which will bring the yr/yr growth down in the second half of this year. The next low is projected to occur in the third quarter 2016. While the growth rate will have slowed, overall positive growth for the economy is expected to continue. It is unlikely that we will have a recession or even a serious downturn before 2020.

MTI billings, like the economy, had an unexpectedly slow first quarter. Quarterly bookings will now essentially level off over the next two years with very modest growth. Most of the quarterly ups and downs in the data will be due to normal seasonal variations. The forecast has 1.0% growth in 2015 and an additional 1% gain in 2016. The low will be passed in the second and third quarters of 2016, with yr/yr growth remaining slightly positive.

Some Other Forecasts . . .

Gross Domestic Product – The third estimate for the fourth quarter GDP remained at 2.2%, with the year up 2.4%. The forecast has 2.9% gains in 2015 followed by 2.6% growth in 2016.

Industrial Production – The industrial production index dropped to 105.2 in March from 105.9 in February. April data will help to indicate whether some of this weakness was due to the west coast dockworkers slowdown. The forecast has been lowered to 2.7% gains in 2015 followed by improved 3.0% growth in 2016.

Light Vehicle Sales – (U.S. sales of vehicles assembled in the U.S., Canada, and Mexico) – Vehicle sales continue to be solid although there are some hints of a slowing. The forecast is lowered and now has 4.4% gains in 2015 followed by 1% growth in 2016.

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