Despite warnings of a potential looming recession, trailer orders in May remained relatively flat compared to April, reaching 18,300 units, according to FTR. While demand was down about 3% from the month prior, it soared 80% year-over-year and orders for the past 12 months total 250,000.
Similarly, Class 8 net orders dipped in May to its the lowest total since November 2021 and slid 13% month-over-month and -43% year-over-year.
Underlying conditions like economic uncertainty, geopolitical risk and ongoing supply chain disruption, haven't changed from April, prompting ACT Research this week to note the firm still "believes a soft landing is the U.S. economy’s most likely path," but the potential for a mild recession “is becoming an increasingly compelling alternative.”
“We find ourselves in a turbulent environment, where still significant positive and increasingly negative economic forces are crashing into one another,” said Kenny Vieth, ACT Research president and senior analyst. “With inflationary shocks emanating from Ukraine, the Fed’s task of engineering a soft landing has become increasingly challenging. We believe downward pressures are building, and the probability of recession continues to grow. We think the probability of a mild recession is now nearly as likely as that of our base-case scenario.”
Vieth added that this inflation-driven economic slowdown is somewhat unique given a number of factors, including “healthy consumer and business balance sheets, strong employment demand and pent-up manufacturing sector activity.”
Yet, he noted, “traditional recession predictors are in play: Fed rate hikes, high energy prices, negative exogenous events and falling equity valuations come to mind. We believe the odds of a recession materializing, in some form or fashion, are essentially 50/50 relative to our slowing topline growth into a modest freight recession base case.”
These same conditions have made truck and trailer OEMs hesitant to open 2023 order books.
