Economic News Blog
Posted by: Steven Kline, Jr. 29. October 2015

MV&P Spending Likely to Slow in 2016

The real 10-year treasury rate was 1.86 percent in September 2015. The real rate was 15 basis points higher than it was last month. This was the highest the real 10-year treasury rate has been since February 2011. Also, this was the fifth month in a row that the year-over-year change in the real rate was positive and the eight month in a row that it has increased. In September, the change in the real rate was the highest it has been since April 2014. 

The growth rate in moto vehicle and part (MV&P) consumer spending has been decelerating throughout 2015. The trend in the interest rate indicates that motor vehicle and part consumer spending will see even slower growth in 2016. Production has been growing at significantly faster rate than spending since 2010. Historically, this is quite unusual. So, one should expect that the deceleration in production will be faster than the deceleration in spending to bring the two into a better balance.

However, one bright spot for mold makers is that the new of number vehicle launches is very high. This means the demand for tooling in the automotive industry should remain strong even if production levels fall.

You can see more charts on the automotive industry, including our business index, here.

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