ACT Research has published its most recent State of the Industry: NA Classes 5-8 Report.
This month's issue touches on how Russia/China supply-chain disruptions, raging inflation, higher interest rates, and recession potential continue to dominate the narrative in the commercial vehicle production sector.
ACT Research Vice President and Senior Analyst Eric Crawford lists the factors impacting the market.
“Russian commodities remain locked out of Western markets, Ukraine remains besieged, and China continues to struggle with COVID and lockdowns,” he says. “The battle against inflation is global. U.S. inflation continues to accelerate, prompting the Fed to lift the Fed Funds rate 75 basis points this week, the largest increase since 1994, and markets and economists are increasingly predicting a U.S. recession in 2023.”
What does that mean for the commercial vehicle channel? Crawford says Classes 5-8 production exceeded lowered expectations in May and build plans were largely unchanged, but supply-chain risks remain elevated.
“Moreover, we believe the likelihood of a U.S. economic recession is growing and probability of a mild recession is now about as likely as that of our base-case scenario,” he says. “Backlogs remain long and order volumes remain constrained. Until build rates find additional traction, orders will largely mirror production levels, but the steep decline in truckload spot rates ex-fuel in recent months will soon impact vehicle demand.”