Page 28 - Wire Rope News & Sling Technology - December 2019
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continued from page 26             ed to start rising in 2021.        without hiring workers who might not
         ening effect on the labor market. “Un-  The housing  rebound will be tem-  be available.”
         employment is expected to edge slightly   pered to some degree by declining af-  If you can’t get enough people, let ro-
         higher to 3.9% by the end of 2020, due   fordability, according to Moody’s. The   bots do the work. That’s the mantra for
         largely to a deceleration of job growth,”   median price for existing single-family   the employer of the future. “Rather than
         says Koropeckyj. “We expect job growth   homes is expected to rise 4.1% in 2019   invest in recruiting and training people
         to  steadily  decelerate  and cease  alto-  and 2.9% in 2020, compared with 4.7%   for labor intensive jobs,  our  members
         gether in the second half of the year.”   growth in 2018. The deceleration of   have been investing in automation and
           For the time being at least, happy   price growth in 2020 is due largely to   capital  equipment,”  says  Palisin.  “We
         shoppers  are  good news  for  retailing,   the increase  in housing  starts bring-  expect this trend to continue in 2020.”
         an important  driver of the national   ing more units to the marketplace, as   Not all employers, though, can foot
         economy. Moody’s expects core retail   well as to price resistance from buyers.   the  bill.  “While  larger  companies  can
         sales to increase by 4.0% when 2019   “Even though home prices will deceler-  automate  internally, small and mid-
         numbers  are  finally  tallied,  up  from   ate they will still increase and owner-  sized ones need to call in external con-
         3.4% of the previous year. (Core retail   ship will become even more out of reach   sulting resources,” says Palisin. “That
         sales exclude the volatile auto and gas-  for many households than it is today,”   can  be challenging  because  many
         oline segments.)                   says Koropeckyj.                   smaller businesses do not have the fi-
           As for 2020, Moody’s expects retail sales   Banks, for their part, seem to be fill-  nancial resources to do so.”
         to increase by only 2.3 percent. “A decel-  ing their critical role in a robust hous-  Indeed, manufacturers  around the
         eration  of  job  growth  means  fewer  new   ing market. “Mortgage lending has been   nation seem to be shy of investing too
         people will enter the ranks of active shop-  continuing unabated and largely con-  much  in  capital improvements of  any
         pers,” says Scott Hoyt, Senior Director of   centrated among borrowers with high   kind. “Manufacturers are nervous, de-
         Consumer Economics for Moody’s Analyt-  credit scores,” says Koropeckyj. “We ex-  spite their success in reaching their
         ics. “And that will exert some downward   pect this pattern to hold in the future.”  earnings estimates,” says Bill Conerly,
         pressure on retail sales growth that may   Interest rates are expected  to con-  Principal of his own consulting firm in
         more than offset the positive effect of the   tinue to play their vital role in support-  Lake Oswego, Oregon (conerlyconsult-
         higher wages (and thus the greater dis-  ing mortgages. “In 2019 interest rates   ing.com). “This is showing up in capi-
         posable income) characteristic of a tight-  turned lower rather than higher, which   tal spending numbers, which were big
         ening labor market.”               was a surprise,” says Hoyt. “The reason   in 2018 coming out of tax reform but
                                            was the unanticipated trade war which   which are not so big now.”
         HOUSING REBOUND                    was clearly a negative and reduced eco-  Even forays into automation are on
           Confident  consumers  are  maintain-  nomic  prospects  significantly  relative   hold. “Labor costs are going up and
         ing a steady drumbeat  of interest in   to expectations.”             good  workers  are  hard  to  find,”  says
         housing, another critical driver of the                               Conerly. “Interest rates are low and
         economy.  Moody’s  expects 2020 to be   TIGHT LABOR                   companies  are  flush  with  cash.  You
         the  first  year  of  a  strong  residential   If robust employment is keeping the   would  think  that investment in  labor
         construction  recovery  led by single-  consumer happy and the housing mar-  saving technology would be going great
         family homes. Housing starts are pro-  ket  bustling,  employers  are  tearing   guns,  but it’s not. Why? Uncertainty.
         jected to grow 7.0% in 2020. This comes   their hair out.             Businesses  wonder if economic  condi-
         off a rocky 2019 in which starts were   “Because of the tight labor situation   tions in the next few years will justify
         expected  to drop by 0.7% when  the   our  companies  have  not  been  able  to   more capacity or even more efficiency.”
         year’s numbers are finally tallied.   add as  many workers  as  they  would   The numbers from Moody’s support
           Why the dismal 2019  experience?   like,” says Palisin. “As a result, it can   Conerly’s observations. “We expect
         “There have been a number of obstacles   be  difficult  for  many  of  them  to  take   real nonresidential fixed investment to
         to stronger residential construction,”   on new business. We expect that to re-  grow by 3.2% annualized in 2019 and
         says Koropeckyj. “The first is a short-  main a problem in 2020.”     2.8% in 2020,” says Koropeckyj. “That’s
         age of specialized workers. The second   Industry is also seeing more job shift-  well  below the 5.4% average over the
         is  the  prevalence  of  strict  residential   ing, in which people leave their current   last two years.”
         zoning regulations, especially in dense   positions for  opportunities elsewhere.
         urban areas. The third is a shortage of   “Employers are now looking at whether   DISRUPTED SUPPLY CHAINS
         residentially-zoned land within com-  they need to adjust their compensation   A scarcity of skilled  workers  is  just
         muting  distance  of  business  areas  in   policies to retain the talent they have   one of the many headwinds restrain-
                                                                            Looking for a product or service
         some metro areas in the Mountain   developed,”  says Palisin.  “So far we   ing American businesses.  Another is
         West and Inland South.”            have seen only a gradual increase in   supply chain confusion—a direct result
                                                                            related to wire rope and slings?
           Older  Millennials  now  reaching   the  cost  of  labor,  but we  expect more       continued on page 30
         prime home-buying age are expected to   accelerated wage growth in 2020.”
         drive the 2020 housing recovery. They   A tight labor market is expected to be
         will be entering the market at a time   with us awhile. “The workforce will be
         when  the housing  inventory-to-sales   put under  continuing  pressure in  the
         ratio is at record lows. The fact that   future,” says Palisin. “Over the next 15
         zoning is generally less restrictive for   years for the first time in the U.S. there
         single-family as opposed  to multifam-  will be more people of retirement age
         ily construction translates into a much   than under the age of 18. And a con-
         stronger  single-family construction   traction in immigration is also putting
         forecast. Relatively low mortgage rates   pressure on the workforce. Companies
         will also help, though these are expect-  will have to look for other ways to grow

         28     Wire Rope News & Sling Technology   December 2019
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