THE GAWDA INDUSTRY ANALYSIS REPORT

U.S. Fabricated Metal Products New Orders Data Trend

SLOWER GROWTH

2022

2023

5.6% $442.8 billion

0.5% $445.0 billion

2024 -3.1% $431.2 billion

HIGHLIGHTS:

◼ We revised the forecast given high interest rates and changes to our expectations for the U.S. industrial economy

◼ The 12MMT will plateau through 2023, then decline in 2024

◼ We now anticipate a Phase D, Recession, trend in 2024

U.S. Fabricated Metal Products New Orders totaled $439.7 billion in the 12 months through October, 7.2% above the same period one year ago. Given actions taken by the Federal Reserve as well as a sustained inversion in the yield curve, we now expect the current cooling in the U.S. industrial economy to progress into a recession in 2024. These factors necessitated a revision to the New Orders outlook.

The New Orders 12MMT was downgraded by 1.3% and 9.8% for 2023 and 2024, respectively. The 12MMT will plateau in the mid-$400 billion range throughout 2023, then decline into the end of 2024. We expect the high-interest-rate environment will elongate rate-of-change decline beyond what is a typical length of time. In line with our expectations for the U.S. industrial sector, we anticipate New Orders will enter Phase D, Recession, in early 2024; that trend will extend into the latter half of that year.

U.S. Fabricated Metal Products New Orders Rate-of-Change

Management Note: Plan on a tougher sales environment ahead and make sure your financial projections account for the cooling macroeconomic environment. Consider holding a larger cash balance as a buffer.

U.S. Construction Machinery New Orders Data Trend

U.S. CONSTRUCTION MACHINERY NEW ORDERS

SLOWER GROWTH

HIGHLIGHTS:

◼ New Orders are in Phase C, Slowing Growth

◼ The single-unit housing starts market is declining, while other segments of construction are rising

◼ New Orders are likely to see Phase D, Recession, this cycle:

U.S. Construction Machinery New Orders in the 12 months through October were 13.4% above the same period one year ago. New Orders have been in a Phase C, Slowing Growth, trend since the end of 2021. New Orders include machinery for both construction and mining. On the construction side, single-unit residential building is contracting due to affordability constraints, and we anticipate further decline into 2023. Multi-unit housing and nonresidential construction markets are still rising. U.S. Mining Production is likely to decline in the near term. Given the movements of the major end-markets, the likelihood that the high-interest-rate environment will hinder capex spending, and historical trends for this series, it is likely that New Orders will post year-over-year contraction later this cycle.

Management Note: Communicate your competitive advantages to differentiate yourself from your competitors and attract and retain customers in this time of slowing growth, with potential market contraction ahead.