MHI Solutions

Economic Market Update

Expectations for the U.S. and Global Economy Improve for 2017

Optimism about the U.S. economic outlook that increased at the end of 2016, strengthened even further in the first quarter of 2017. U.S. consumer confidence rose sharply in the first quarter and data from the ISM Manufacturing and Non-Manufacturing purchasing manager indices (PMIs) and the MHI Business Activity Index (BAI) was positive. Although there had been downside risks to U.S. GDP growth in the first quarter from a strong dollar and slowing automotive sales, second and third quarter growth have been exposed to the downside from potential U.S. policy disappointment.

While U.S. economic data and fiscal policy have offered surprises in recent months, global growth still is on track to expand. Throughout the first quarter of 2017, the Chinese Caixin manufacturing PMI conveyed growth, supporting a trend of expansion and acceleration in growth, since the Chinese manufacturing recession ended in June 2016. The trend improvements of Chinese growth provided support for industrial metals and oil prices through the second half of 2016 and the first quarter of 2017. Meanwhile, the Eurozone manufacturing PMI and the German Ifo conveyed expansion and acceleration in the first quarter of 2017. These improved European data presented fundamental upside economic risks to the euro at the beginning of the second quarter of 2017.

By Jason Schenker

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According to the recently released 2018 MHI Annual Industry Report, “Overcoming Barriers to NextGen Supply Chain Adoption,” eight out of ten survey respondents believe these supply chains will be the predominant model within just five years. However, the report found that the adoption of some of these technologies was slower than originally reported when MHI started the annual report in 2014. The report cites three top barriers to adoption of these technologies: 1. Making the business case for NextGen supply chain investments. 2. Tackling the supply chain skills gap and workforce shortage. 3. Building trust and security in digital, always-on supply chains. This issue of MHI Solutions focuses on the adoption of these digital solutions, from best practices in robotics and artificial intelligence to blockchain and innovations in last mile delivery.

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