Economic outlook from AMCA Intl.

The Air Movement and Control Assn. Intl. released a quarterly forecast newsletter for the third quarter of 2007 authored by consulting economist, Hans Zigmund. The industry's principal economic indicators continue to provide mixed results.

Housing markets continue to struggle, Zigmund said. According to the U.S. Census Bureau, new housing starts and building permits were down more than 27%. Housing starts historically provide a strong leading indicator of future air-movement industry activity.

On the other hand, industrial capacity utilization rates continue to remain high. The Federal Reserve Board of Governors reported that June 2007 capacity utilization index was 81.69. This is only down slightly from 82.25 in June 2006, Zigmund explained. High rates of capacity utilization are generally a good sign for manufacturers of air movement and control products whose primary product lines are industrial in purpose.

Non-residential investment continues to outperform expectations. Total non-residential construction put in place for June is up 11.3% against June 2006. The average growth rate for 2007 is 11.7% vs. 2006. The strength of non-residential construction is the primary contributor to an upward revision.

Finally, industry shipments have outpaced expectations through the first half of 2007, boosted by the strength of non-residential construction and the continuing upward pressure on the price of steel and other inputs.