a curve in the road -...

Dr. Alan BeaulieuPresident

A Curve in The Road

Tag and Label Manufacturers Institute

First in Forecasts Since 1948

ITR Economics provides the best economic intelligence to reduce

risk and drive practical and profitable business decisions.

Duration 2015 Forecast Result Accuracy

US GDP 18 $16.632 Trillion $16.442 Trillion 98.9%

US Ind. Prod. 17 108.3 (12MMA) 107.1 98.9%

Eur Ind. Prod. 15 100.4 (12MMA) 103.3 97.1%

Canada Ind Prod 17 361.2 (12MMA) C$351.2 97.2%

China Ind Prod 22 607.0 (12MMA) 598.3 98.6%

US Housing 17 1.090 Mils. Units 1.111 Mils. Units 98.1%

US Retail Sales 13 $2.248 Trils deflated $2.244 Trils deflated 99.8%

US Employment 21 147.7 Million 148.8 Million 99.3%

2015 Forecast Results2


24.5%

15.0%

5.6%4.6%3.9%3.3%

2.9%2.5%

2.4%2.1%

1.9%1.8%

1.7%1.6%1.6%1.2%1.0%1.0%

0.9%0.9%

19.6%

United States

China

Rest of World

Japan

Australia

Percent of 2015 World GDP by Country

*Total 2015 World GDP: $73.171 Trillion, US$

Source: IMF, *67% are IMF Estimated Figures


US States Renamed for Countries with Similar GDPs

Data Sources: BEA; IMF


US Industrial Production to Gross Domestic Product

Sources: FRB, BEAYear-over-Year, Quarter-to-Quarter (3/12)

-6.8%

-2.9%-5.3%

-15.5%

-0.9

-16

-12

-8

-4

0

4

8

12

-16

-12

-8

-4

0

4

8

12

'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

GDPUS IP

GDPUS IP

Mining 17%Electricity generation 10%Manufacturing 73%

Manufacturing: Normal seasonal activityIndustrial Production: April ‘16 low

Monthly up 2.5%, normal, like 2001


12-Month Moving Average 12/12 Rate-of-ChangeYear-over-Year Growth Rate

• Annual Trend: • Phase: • Year-over-Year:

IndustryOutlook

2016:2017:2018:

US Industrial Production Index

84

89

94

99

104

109

114

119

84

89

94

99

104

109

114

119

-15

-10

-5

0

5

10

-15

-10

-5

0

5

10

US Industrial Production Index

104.3D

-1.3%

-1.0%2.7%

Source: FRB


12-Month Moving Total 12/12 Rate-of-ChangeYear-over-Year Growth Rate

• Annual Trend: • Phase: • Year-over-Year:

IndustryOutlook

2016:2017:2018:

Gross Domestic Product

0

5

10

15

20

25

0

5

10

15

20

25

-9

-6

-3

0

3

6

9

-9

-6

-3

0

3

6

9

US Gross Domestic Product

$16.5 trillionC

1.7%

1.9%3.5%

Source: BEA


RawNov-14 1.4Dec-14 1.5Jan-15 1.5Feb-15 1.4Mar-15 1.5Apr-15 1.3

May-15 1.3Jun-15 1.6Jul-15 1.6

Aug-15 1.5Sep-15 1.7Oct-15 1.6Nov-15 1.7Dec-15 1.7Jan-16 1.7Feb-16 1.6Mar-16 1.7Apr-16 1.5

May-16 1.5Jun-16 1.9Jul-16 1.7

Aug-16 1.7Sep-16 1.9Oct-16 1.7

3/12 Rate-of-Change

= 𝑂𝑐𝑡𝑜𝑏𝑒𝑟 2016 3𝑀𝑀𝑇𝑂𝑐𝑡𝑜𝑏𝑒𝑟 2015 3𝑀𝑀𝑇

× 100 − 100

=5.34.8

× 100 − 100 = 10.4%

3MMT

4.44.44.44.24.14.24.54.74.84.85.05.05.15.05.04.84.74.95.15.35.35.3

12MMT

18.018.218.418.618.819.019.219.419.719.820.020.220.3

12/12

26.7%25.5%25.2%22.4%20.0%18.3%15.4%12.7%

12/12 Rate-of-Change

= 𝑂𝑐𝑡𝑜𝑏𝑒𝑟 2016 12𝑀𝑀𝑇𝑂𝑐𝑡𝑜𝑏𝑒𝑟 2015 12𝑀𝑀𝑇

× 100 − 100

=20.318.0

× 100 − 100 = 12.7%

3/12

15.9%13.6%13.6%14.3%14.6%16.7%13.3%12.8%10.4%10.4%

Data Preparation


-20

-10

0

10

20

-20

-10

0

10

20

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

ContainersUS IP

US IP

Containers

US Industrial Production to Paperboard Containers Production

Source: FRB12/12 Rates-of-Change

-0.2% A3/12 0.2% B Mar ’16 low

12MMA 0.2% Mar’ 16 low MTN3MMA up slightly MTN 0.6% Feb ‘16 low


CConsumer

Prices

00

Soft Landing

A

B

D

Housing

Trends 10

Production

Medical

New Orders

Financial

Retail

Wholesale Trade

Foreign

Nonresidential Construction

Hard Landing


U.S. Oil & Gas Extraction Production Index

Source: FRB2012 = 100

131.6

50

90

130

170

210

250

-30

-20

-10

0

10

20

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMAR-O-C

3/12 12/12

12MMA3MMA

Steepest 3MMA decline in 63 yearsLate 2016 3MMA Low

August & Sep – normal declines

- 3.0%


United States OverviewWeekly Oil Price & Rig Count

Sources: EIA, Baker HughesRigs: Weekly Count WTI: Average Weekly Price

$0

$20

$40

$60

$80

$100

$120

0

250

500

750

1,000

1,250

1,500

1,750

Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017

USD/bblRig Count

Oil Rigs

WTI Price - Shifted 13 Weeks

Two factors have caused the glut to disappear: Deep output cuts by producers outside the Organization of the Petroleum Exporting Countries, and healthy global demand for crude oil, the IEA said.

WSJ Aug 11


US Consumption of Crude Oil & Petroleum Productsto Real Gross Domestic Product

Sources: EIA, BEAData Trends

6

10

14

18

0.4

0.5

0.6

0.7

1985 1990 1995 2000 2005 2010 2015 2020

GDPTrils C2009$

OilBils Barrels

Oil Consumption - Raw DataGDP - 3MMA


US Total Renewable Energy Consumption

Source: EIAQuadrillion Btu

10.0

3

4

5

6

7

8

9

10

11

12

3

4

5

6

7

8

9

10

11

12


US Carbon Dioxide Emissions

Source: EIA.govMillion Metric Tons

5126.5

4700

4900

5100

5300

5500

5700

5900

6100

6300

4700

4900

5100

5300

5500

5700

5900

6100

6300

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Dec 2012: 5232.0 MMT

Feb 1995: 5219.7 MMT


Ongoing Concerns

China

B2B activity has yet to turn up

Brexit

South America

US Debt

World Demographics


US Trade in Goods with World: Exports to Trade Weighted Exchange Rate Index

Sources: Census Bureau, FRED12/12 Rates-of-Change

-7.0%

3.5%

-15

-10

-5

0

5

10

15

20-30

-20

-10

0

10

20

30

40

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Exchange RateExports

Exports

Exchange Rate

3/12 - 1.7% 3Q 3MMA STA 0.8%


Corporate Profits to US Industrial Production

Source: BEA, FRB12/12 Rates-of-Change

-6.7%-1.3%

-15

-10

-5

0

5

10

15

-45

-30

-15

0

15

30

45

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

US IPProfits

ProfitsUS IP

The US Industrial Production (USIP) 12/12 has a 9 month lag time to the Corporate Profits 12/12 through business cycle highs and lows.

1/12 and 3/12 are rising….


US Leading Indicator

Source: The Conference Board2010 = 100

1.1%

-25

-20

-15

-10

-5

0

5

10

15

-25

-20

-15

-10

-5

0

5

10

15

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

1/12


Nondefense Capital Goods New Orders w/o Aircraft

Source: Census BureauBillions of Dollars

-4.4%-3.9%

$764.6

500

750

1000

1250

1500

-60

-40

-20

0

20

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMTR-O-C

3/1212/12

3MMT12MMT

Dec ‘16 Low2017 4.6%


Nondefense Capital Goods New Orders (excl. Aircraft) to Manufacturing Capacity Utilization

Sources: Census Bureau, FRBRates-of-Change

-30

-20

-10

0

10

20

30

-30

-20

-10

0

10

20

30

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

New OrdersNew Orders ForecastUtilization Rate

Utilization RateNew Orders

1/12 12/12


US Nondefense Capital Goods New Orders (excluding aircraft) to US Total Wholesale Trade

Source: US Census Bureau12/12 Rates of Change

-2.6%-3.9%

-30

-20

-10

0

10

20

-30

-20

-10

0

10

20

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

New OrdersWholesale Trade

Wholesale Trade

New Orders


Total Expenditure on Health as a Percent of GDP(1995-2013)

Source: World BankPercent

6

8

10

12

14

16

18

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

USAFRASWIGERCANNLDNZLDENSWEUKNORAUS


Total U.S. Public Debt

Source: USgovernmentspending.com(% of GDP)

0

20

40

60

80

100

120

140

0

20

40

60

80

100

120

140

1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

122.2%

The Long View…


Federal Government Current Tax Receipts to Consumption Expenditures to Current Transfer Payments as a Percent of GDP

Data Source: BEAPercent

0%

5%

10%

15%

20%

0%

5%

10%

15%

20%

1946 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018

Current Tax ReceiptsConsumption ExpendituresCurrent Transfer Payments


CBO Projection Statistics

Data Source: CBO, 2015Billions of Dollars

A B C D E

B+C+D/E Net Interest Healthcare Social SecurityTotal

Spending

2015 56% 234 936 882 3,690

2030 69% 1,176 2,251 2,049 7,896

2035 71% 1,602 3,041 2,589 10,110


US/Global Recovery – Good Days Ahead

Consumers are in great shape

Interest Rates remain favorable

Employment rising, as are wages

Banks are lending

Retail Sales at a record high level

Non-residential construction is improving

Commodity Prices are experiencing some upside pressure


Global Leading Indicators

Source: Markit Economics1/12 Rates-of-Change

0.6%1.2%

-1.9%

-60

-40

-20

0

20

40

60

80

-60

-40

-20

0

20

40

60

80

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

EZ Comp PMIEU Manufacturing PMIJP Morgan Global MFG PMI

OECD plus 6 major NME up5 Major Asia upChina upAustralia upBrazil upMexico up

Industrial Production in 2017

China 5.9% T Jun ‘16 L 6.9%Canada -0.6% T Jan ‘16 L 3.6%Brazil -9.6% T Jun ‘16 L 1.6%Mexico 0.5% declining 3.1%


US Total Foreign Direct Investment

Source: BEABillions of Dollars

$225.9

0

100

200

300

400

500

0

100

200

300

400

500

12MMT


US Total Manufacturing Production Index

Source: FRB2012 = 100, Raw Data

105.2

30

50

70

90

110

130

30

50

70

90

110

130

'72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Manufacturing

1. Near –Sourcing2. Technology3. Capital vs. Labor4. Energy5. Consumer base 12MMA 3.8% below

the Feb ‘08 record high


2016 Global Manufacturing Competitiveness Index

Source: DeloitteIndex Score: 100 = High, 10 = Low

Rank Country Index Score1 China 100.02 United States 99.53 Germany 93.94 Japan 80.45 South Korea 76.76 United Kingdom 75.87 Taiwan 72.98 Mexico 69.59 Canada 68.710 Singapore 68.4

2016 (Current)Rank Country Index Score1 United States 100.02 China 93.53 Germany 90.84 Japan 78.05 India 77.56 South Korea 77.07 Mexico 75.98 United Kingdom 73.89 Taiwan 72.110 Canada 68.1

2020 (Projected)

• Talent is the most important driver of a country’s ability to compete on the global stage

• Cost competitiveness is the second most influential driver


18.615.0

12.411.3

10.28.3

6.15.9

5.55.3

4.33.53.33.1

2.12.0

0.70.6

0.2

Health care and Social AssistanceRetail Trade

Accommodation and food servicesManufacturing

Administrative/support and waste management svcsProfessional, scientific, and technical services

Finance and insuranceWholesale trade

ConstructionOther svcs (except public administration)

Transportation and warehousingEducational Services

InformationManagement of companies and enterprises

Arts, entertainment, and recreationReal estate and rental and leasing

Mining, quarrying, and oil and gas extractionUtilities

Agriculture, forestry, fishing and hunting

Manufacturing is the Fourth Largest Employer in the US

Source: Census Bureau 2013 County Business PatternsMillions of Employees

Manufacturing


Where are US Manufacturing Jobs?

Source: Census Bureau 2013 County Business PatternsDollars

In 2013, 29.7% of manufacturing employees 25

and older had a bachelor’s

degree or higher


How Does Manufacturing Contribute to Exports?

Source: Census BureauDollars

In 2013, about 6 in 10 US Export Dollars came from manufacturers.


US Auto Exports

Source: FREDThousands of Units

90.6

0

20

40

60

80

100

120

140

0

20

40

60

80

100

120

140

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Auto Exports


Apple Rolls Royce AT&TYamaha Honda FordMichelin Lenovo K’NexWham-O Airbus MERCK

Bayer Chemical Toshiba BraunCaterpillar Toyota NCR

GE Flextronics OTISNCR Siemens SKF

CHOBANI Boeing FAGE

USA Manufacturing Wall of Fame


Wall of Fame – page 2

Coleman GM Mercedes-BenzYokohama LuckyBrand Ashley FurnitureSentrySafe MARS Navistar

Heinz little tikes Otter BoxWhirlpool KitchenAid’ Samsung

Brooks Brothers DeWalt Master Lock

Armstrong Dow IntelNissan

USA Manufacturing Wall of Fame


US Industrial Production to ITR Leading Indicator™

Sources: FRB, ITR EconomicsUSIP – 12/12 Indicator - Monthly

-15

-10

-5

0

5

10

15

-15

-10

-5

0

5

10

15

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

IndicatorUS IP

Indicator - MonthlyUS IP - 12/12

Reported in ITR Trends Report – ITR Advisor

As seen in

Ratio of Inventories to New OrdersFRB leading indicator


-30

-20

-10

0

10

20

-15

-10

-5

0

5

10

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18

US IPUS IP ForecastUtilization Rate

Utilization RateUS IP

US Industrial Production to US Total Industry Capacity Utilization Rate

Source: FRBRates-of-Change

Monthly 75.9% Up a typical 1.4% off a

March 2016 low


US Industrial Production Index to US Owner Occupied Housing Inventory

Sources: FRB, Census Bureau12/12 Rates-of-Change

-6

-4

-2

0

2

4

6

-15

-10

-5

0

5

10

15

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18

US IPUS IP ForecastInventory

InventoryUS IP


Purchasing Managers Index

Source: Institute for Supply Management1/12 Rate-of-Change

3.0%

-50

-25

0

25

50

75

-50

-25

0

25

50

75

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

1/12

Leads US Economy by 9-14 months

As seen in


US Food Production Index to US Purchasing Managers Index

Source: FRB, Institute for Supply ManagementRates-of-Change

1.7%

-70

-35

0

35

70

-6

-3

0

3

6

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Food

Food - 12/12

PMI 1/12

3.0%

PMI

3/12 2.3% B

2017 1.2%


Stock Prices Index

Source: WSJS&P 500, 1941-43 = 10

2.8%1.4%

2080.6

200

1000

1800

2600

3400

4200

5000

-120

-90

-60

-30

0

30

60

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMAR-O-C

1/1212/12

Actual

12MMA

43


US Private Sector Employment

Source: BLSAnnual Data Trend

85

95

105

115

125

85

95

105

115

125

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Employment Mils of Jobs

Private Sector Employment GrowthJob OpeningsInvoluntary Part Time EmploymentQuit Rate – Rising

8.8% C2.1% C

-9.0% A

Wages are also strongAverage Hourly Earnings, Monthly data as of August 2016 (source: Bureau of Labor Statistics)Total Private Workforce $25.73 record highWholesale Trade $29.44 May record high $29.62, normal seasonal varianceConstruction $28.19 record highManufacturing $25.91 July record high $26.02, normal seasonal variance


US Private Industry Average Monthly Employer Cost for Employee Health Insurance

Source: BLSDollars per employee

0.8%1.0%

$362.8

275

325

375

425

-20

-10

0

10

'08 '10 '12 '14 '16 '18 '20

MMAR-O-C3/12

12/12

3MMA

12MMA


Average Annual Earnings: Offices of CPA to Manufacturing Workforce to Healthcare Workers to Total Private Workforce

Source: BLSAnnual Data Trend, Thousands of $

$54.6

$48.9

$66.1

$19.1

17

18

19

20

21

22

23

24

35

40

45

50

55

60

65

70

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

PrivateMfg/Health/CPA

Offices of CPAManufacturingHealth CarePrivate


Consumer Credit

Source: FRBTrillions of Dollars

8.7%7.2%

1.3

0.4

0.7

1.0

1.3

1.6

1.9

2.2

-80

-60

-40

-20

0

20

40

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMAR-O-C

12/123/12

Actual12MMA


Real Personal Income Less Transfer ReceiptsAverage per Person Age 18 to 65

Sources: FRED, BLS12MMA Data Trend

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

No issues evident with credit or delinquencies


US Retail Sales Excluding Gas Stations (deflated)

Source: Census BureauTrillions of Dollars

2.7%3.4%

2.107

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMTR-O-C3/12

12/12

3MMT 12MMT

3MMA seasonal is rise normal (barely)Milder than the last 3 years

Spending at a record high, more ahead


US Total Retail Sales (deflated) to US Wholesale Trade of Apparel, Piece Goods and Notions

12/12 Rates-of-ChangeSource: US Census Bureau

0.8%2.2%

-10

-5

0

5

10

15

-14

-7

0

7

14

21

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

WholesaleRetail Sales

Wholesale Retail Sales


US Wholesale Trade of Apparel, Piece Goods and Notions

Source: US Census BureauBillions of Dollars

0.3%2.2%

$166.7

50

125

200

275

-60

-30

0

30

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMTR-O-C

3/12 12/12

3MMT12MMT

3MMT seasonal rise is normal Milder than the last 2 years

Better rate of growth in 2017


Clothing Stores Retail Sales to Total Retail Sales (Deflated)

Sources: US Census Bureau; Bureau of Economic Analysis12/12 Rates-of-Change

0.0%

5.0%

-10

-5

0

5

10

-10

-5

0

5

10

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

RetailTrils $

ClothingBills $

ClothingRetail


US Clothing Stores Retail Sales

Source: US Census BureauBillions of Dollars

-0.6%

0.0%

187.2

60

150

240

330

420

510

-18

-12

-6

0

6

12

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMTR-O-C

3/12 12/12

3MMT 12MMT

Tentative June ‘16 3/12 low

3MMT seasonal is normal Milder than the last 2 years

Faster rate of growth in 2017


US Beverage Production Index

Source: FRBN3121, 2012 = 100

-0.5-0.6105.1

70

85

100

115

130

145

160

-20

-15

-10

-5

0

5

10

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMAR-O-C

12MMA

3MMA

12/12

3/12

3MMA Average 3Q decline12MMA rise in 2017

Broad 3/12 trough12/12 lowest in 5+ yrs


US Beverage Production Index to US Corporate AAA Bond Yields Inverted for Prices


4.0%

-0.6%

-20

-10

0

10

20

30

-10

-5

0

5

10

15

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

BondBeverage

BeverageBond


US Beverage Production Index to US Distillery Production Index


6.1%

-0.6%

-20

-10

0

10

20

30

-10

-5

0

5

10

15

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

DistilleryBeverage

Beverage

Distillery


US Health & Personal Care Stores Retail Sales toUS Retail Sales (excluding gas stations)

Source: Census Bureau12/12 Rates-of-Change

6.8%4.1%

-10

-5

0

5

10

15

-10

-5

0

5

10

15

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

Retail SalesHealth Stores


US Health & Personal Care Stores Retail Sales


7.7%6.8%

$330.2

100

160

220

280

340

400

460

520

-20

-15

-10

-5

0

5

10

15

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMTR-O-C3/12

12/12

3MMT12MMT

STN 3Q 3MMT riseRecord high 12MMT

More 12MMT rise in 2017


Architecture Billing Index

Source: American Institute of ArchitectsIndex from monthly inquiries

61.8

55.2

52.8

51.8

50.9

50.8

50.7

49.7

49.0

44.9

25 35 45 55 65 75

Architecture INQUIRIES Index

South Region Architecture Billings Index

Midwest Region Architecture Billings Index

Mixed Sector Architecture Billings Index

Residential Sector Architecture Billings Index

Commercial/Industrial Sector Arch. Billings

Institutional Sector Architecture Billings Index

Architecture Billings Index

West Region Architecture Billings Index

Northeast Region Architecture Billings Index


Housing Starts

Source: Census BureauMillions of Units

2.4%7.5%

1.157

0.2

1.0

1.9

2.7

3.5

4.4

5.2

-80

-60

-40

-20

0

20

40

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMTR-O-C

3/12

12/12

3MMT 12MMT

Mar ‘13

Dec ‘09As seen in

Tentative Jun ‘16 3/12 L12MMA is at an 8 yr high

Slightly MTN 3MMA seasonal riseFollowed by MTM Aug seasonal decline


US New Homes Sold

Source: Census BureauThousands

24.2%11.1%

549.0

200

500

800

1100

1400

1700

2000

2300

-75

-60

-45

-30

-15

0

15

30

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMTR-O-C

3/1212/12

3MMT 12MMT

Should spur builders12MMA is the highest in just

under 8 yrsSTN 2Q16 3MMA and July

monthly rises


Percent Who Think They Will Marry and Have Kids

Source: The Council of Economic Advisers

Percent


Commercial Buildings Construction


8.8%5.7%

67.9

10

50

90

130

170

210

-120

-90

-60

-30

0

30

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMTR-O-C3/12 12/12

3MMT 12MMT

12MMA is at an 7 yr highMild, but normal, 3MMA seasonal rise

Normal July rise

2017 9.5%

Total Nonresidential Construction9.3% C $08.3 B, best in 7+ yrs


Office Buildings Construction


28.1%25.4%

55.2

10

25

40

55

70

85

100

115

-125

-100

-75

-50

-25

0

25

50

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMTR-O-C

3/1212/12

3MMT12MMT

Decelerating rise in 2017

Construction SegmentsConstruction Segments Annual Trend

Sector Phase Year-over-year Annual Data Trend In $

Total Public Construction C 0.2 DecliningTotal New Construction C 6.8 DecliningTotal Health Care FacilitiesPrivate Medical Building Construction

C 3.0 DecliningC 3.1 Declining

Primary & Secondary Building Construction D -8.8 DecliningPrivate Education Building Construction B 7.8 RisingTotal Office BuildingPrivate Office Building Construction

B 20.9 RisingB 25.4 Rising

Private Lodging C 26.5 RisingTotal Commercial Building B 6.6 RisingMulti-Family Residential C 22.6 RisingAirport Passenger Terminals D -2.3 Declining


Commodity Prices

Source: WSJ, London Metal Exchange, Metalprices.com, Steel Market Update3/12 Rates-of-Change

29.0% Zinc22.3% Tin

9.3% Lead3.6% Alum

32.8% Steel

-7.9% Copper

-100

-50

0

50

100

150

200

-100

-50

0

50

100

150

200

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

All OthersZincTinLeadAluminumSteelCopper

Copper & Steel


Commodity Prices

Source: WSJ, London Metal Exchange, Metalprices.com, Steel Market UpdateMonthly

$1.1 Zinc

$8.9 Tin

$2.2 Copper $817.5 Steel

$1942.0 Lead $1658.5 Alum

0

800

1600

2400

3200

4000

0

3

6

9

12

15

'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

All Others, $ per pound

ZincTinCopperSteelLeadAluminum

Lead, Aluminum, Steel, $ per ton


Paper Producer Price Index

Source: BLS1982=100

-1.1%-2.2%

186.9

120

160

200

240

280

320

-45

-30

-15

0

15

30

'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20

MMAR-O-C

3/1212/12

3MMA12MMA Normal 3Q 3MMA rise

Monthly rising at a normal pace off a Feb ‘16 low


0

1

2

3

4

5

6

FOMC Member Interest Rate Projections

Data Source: Federal Reserve

Fed Open Market CommitteeSeptember 2016June 2016


It’s time to….1. Hire talent and then work on retention2. Spend liberally on marketing and competitive advantages3. New products and services4. Drive efficiencies with technology5. Expand credit offerings to garner market share6. Find out where you fit into the business cycle7. Most importantly – realize it is about you…

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