MTI Hosts 2nd Quarter Economic Forecast Webcast
The Metal Treating Institute hosted its quarterly economic webcast, presented by ITR Economics on May 28. MTI invest $50,000 annually to provide highly accurate forecasting so Members and their employees can have clarity on where the economy and industry is headed.
You can click the video in this article to watch the full replay of the webcast.
You can also access the 24 page economic report and webcast slides by CLICKING HERE.
Based on the MTI May 2026 Forecast Report and the 2Q26 Economic Update presentation, the outlook for the U.S. economy and the heat treating industry remains positive through 2026, although growth is expected to moderate in 2027 before reaccelerating in 2028. The key theme is "growth with caution."
Executive Summary
The economy continues to expand despite geopolitical uncertainty, inflation pressures, and elevated interest rates. Technology investment, defense spending, electrification, reshoring, and manufacturing modernization are driving much of the growth. However, margin compression, labor shortages, rising energy costs, and slower growth in 2027 remain concerns.
For heat treaters, the forecast is encouraging:
- MTI average sales forecasts were upgraded.
- Most industrial markets are improving.
- Capital spending remains strong.
- Labor competition will intensify.
- Efficiency and automation investments will be critical.
- A mild slowdown is expected in 2027 before growth resumes in 2028.
Strategic Takeaways for Heat Treaters
ITR's message to MTI Members is clear:
1. Growth Is Here, But Not Everywhere
Focus resources on:
- Aerospace
- Defense
- Electronics
- Power generation
- HVAC
- Construction equipment
2. 2027 Will Be Softer
Plan for:
- Slower volume growth
- Margin pressure
- More selective customer spending
Avoid building excessive inventory late in 2026.
3. Invest in Productivity, Not Just Capacity
ITR repeatedly stresses:
- Automation
- Process controls
- Efficiency improvements
- AI and digital tools
These investments help offset rising labor and energy costs.
4. Watch the Leading Indicators
The two most important indicators for heat treaters remain:
- U.S. Industrial Production Index
- U.S. Nondefense Capital Goods New Orders (excluding aircraft)
Both remain positive today, supporting continued growth through 2026.
Bottom Line
The MTI/ITR forecast calls for a solid 2026, a softer, but not recessionary 2027, and renewed growth in 2028. Heat treaters should expect rising sales opportunities, especially in aerospace, defense, electronics, and industrial modernization projects. However, profitability, not revenue growth, may be the biggest challenge as labor, energy, transportation, and material costs continue to rise. Companies that invest in automation, efficiency, and workforce development over the next 24 months will be best positioned to capitalize on the remainder of the decade's growth cycle.
Make sure to share this informative economic information with all your team members to minimize uncertainty and maximize clarity.
Don’t miss the next MTI Economic Forecast on August 27 at 2:00 pm ET.