The commercial aerospace industry, including Boeing Co., promises to be among the best-performing sectors over the next 18 months, according to a North American manufacturing outlook that projects stable, but unspectacular, growth across the board.
The report by Moody’s Investors Service, the credit rating and analysis firm, shows aerospace and manufacturers of heating, ventilation and air conditioning equipment will be the only sectors maintaining their current stronger-than-average earnings growth through the first quarter of 2016.
“Growth should remain strong in commercial aerospace, buoyed by favorable air traffic trends, improving airline profitability and sustained demand for large airliners,” the report states. “And energy efficiency requirements and climate concerns in the U.S. and Europe have stimulated replacement demand for HVAC companies.”
Boeing, which makes the 787 Dreamliner commercial airplane at its North Charleston campus and in Everett, Wash., is among the manufacturers cited in the report.
Moody’s says the median growth in earnings before interest, taxes and other expenses for all manufacturers will be between 2 percent and 2.5 percent through the first quarter of 2016. That’s half of what was projected just six months ago and is due to sluggish global growth in Gross Domestic Product, particularly in China, and appreciation of the dollar against world currencies. The report projects global GDP growth at between 2.5 percent and 3.5 percent for the 18-month period.
Among the weakest manufacturing sectors are equipment for agricultural, coal mining and upstream oil operations, according to the report. Defense also remains weak amid uncertainty over U.S. military spending.
Although consumer sentiment has been weakening in recent months, it still remains strong as evidenced by the number of automobiles being sold in the U.S. Moody’s expects auto sales to grow 2.8 percent in 2015 and 2.4 percent in 2016, fueled in part by lower gasoline prices.
While the Federal Reserve is expected to raise interest rates before the end of this year, “we expect any tightening of U.S. monetary policy to be gradual,” the report states.
Although European markets are stabilizing, Moody’s does not expect to see meaningful growth in U.S. exports through 2016.
With the $5.2 billion Panama Canal expansion now 90 percent complete, shippers are lining up to bring Asian goods to East Coast ports starting next year, according to a report by Drewry Maritime Research.
“Since the start of the year there have been six new services created for the Asia to U.S. East Coast trade, with all but one of them routed via Panama,” Drewry said. The other route is bringing Asian goods through the Suez Canal. All but two of the shippers planning to use the Panama Canal have the Port of Charleston on their list of stopping points.
All told, there are 44 ships in the alliances created since March looking to build a customer base in Charleston and elsewhere along the East Coast. Those ships will be carrying between 4,100 and 4,900 cargo boxes to begin with. Once the canal is expanded by next spring, it will be able to handle ships carrying as many as 13,000 containers.
Reach David Wren at 937-5550 or on Twitter at @David_Wren_