Aerospace Market Forecast

Barr Group Aero Indicator
Steady healthy growth was widespread in 2011 but many fear a slowdown in 2012. The new year comes with many new challenges. Barr Group Aerospace forecasts a near flat two first quarters followed by a brisk 3% to 5% growth in the second half of the year. Expansion of air travel and the replacement of old aircraft for much more fuel efficient planes will lead the growth.
 

The aerospace industry is about 50/50 government/commercial, and the government side is the most unstable at the moment. The indicator shows a reading of 99.08 for January 2012, down steadily during the last six months. Expect aerospace manufacturing to fall nearly 1% at an annual rate during the next six months, or about half of that for the next six months.
 

1. Aerospace Industrial Production
From a low of 95.45 a year ago, it recently hit 108.4, up 13.45% at an annual rate. This is way above the reading of only 93.18 for all U.S. manufacturing.

2. Aerospace Capacity Utilization
While capacity utilized in U.S. aerospace plants was a mere 70.88% a year ago, they rose steadily all year to 79.73% recently, up over 12.4% at an annual rate. This is slightly above the 76.40% rate for all U.S. manufacturing.

3. U.S. Aircraft Manufacturing Workers
While the country still suffers from high unemployment, aerospace manufacturing continues to add jobs. November – the latest month on record, netted 3,000 net new jobs.

4. U.S. Aircraft Passenger Market
The latest passenger traffic numbers, for October 2011, are 67,238,736 passengers, or down 0.7% from a year ago. This is the first drop since last February after a long period of 2% growth. This is the first sign of a strong head wind on 2012 growth.

5. U.S. Air Cargo and Air Mail
Air freight is off. From October 2010 to October 2011 it is down 123 tons, or down 6%.

6. U.S. Aerospace Profits
The latest quarterly report, Q3 2011 showed profit at $5.767 billion, the highest ever, with most of that going to firms with assets greater than $25 million.

7. DoD and NASA Spending and Aerospace
No perfect numbers can be found, but as Congress continues to tweak spending, 2012 will not get hit as hard as 2013. Expect about a 1% per month fall throughout the year and even more in 2013. Direct DoD spending is only expected to be $612.889 billion this year compared to $708.417 last year.

8. Aerospace Trade
The latest figures continue to report exports at two and half times imports, as a growing industry continues to both import and export more.

9. Sales of Aircraft and Aircraft Parts
Boeing reported net orders of 805 aircraft in 2011, up from 530 a year ago, and have 148 net order through February 7, 2012. Total U.S. sales of aircraft and aircraft parts from October 2010 to October 2011, the latest available data, was up 19.78%.

The aerospace manufacturing sector unless otherwise noted is NAICS3364 numbers.

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