Just as quickly as 2022 arrived, the midpoint of the year is suddenly upon us.
As we pause and evaluate how the economy is doing at the halfway mark, a mixed bag is coming into focus. Ongoing inflation, higher interest rates and a deceivingly strong job market are some of the main characteristics. Similarly, up-and-down economic indicators are also defining the vacuum industry.
Let me provide a few examples.
Sales and Shortages
For starters, the semiconductor segment is setting all-time sales records. Meanwhile, chip shortages are causing some supply chain complications across industries. Buildings and equipment take years to develop for new semiconductor fabs. That’s why we’re confident vacuum equipment sales should flourish in this area for the foreseeable future.
Government Spending
We are seeing many government projects at universities and national labs. Government spending into research is also steady. This influx of activity into the public sector will pay dividends.
Slowing Consumer Sentiment
Thirdly, the capital equipment market is strong. However, we are noticing signs of slowing consumer sentiment. Even during the economic and pandemic challenges, consumer sentiment stood apart as one of the bright spots, but that is changing. A big reason could be rising interest rates.
As we move forward toward the end of 2022, I fully expect the capital equipment purchases in the automotive, industrial and consumer products sectors to slow.
Market Conditions
Finally, the war in Ukraine, rising inflation and a dip in the stock market continue to raise flags. There are some concerns that can blemish the market and possibly usher in a recessionary period. Hopefully, the economic undercurrents are passing and transitionary, so that the economy continues to expand, but at current glance, some of the biggest indicators are not ideal. The evidence for a recession is mounting. Home sales, for instance, have dropped, and consumer merchandise returns are at an all-time high. These market conditions show that a soft landing is not the likely outcome. According to history, inflation has only been stopped by a recession.
So, the question is: Will we be in a recession in 2023? It’s a strong possibility.
As we move forward, there are some positives to think about. As I mentioned, there are strong sales of vacuum equipment and GNB has plenty of inventory to fulfill orders quickly. We have reasonable lead times, and our sales are doing well. We’re ready to accept more business! If you work with us, you will partner with a company that offers world-class vacuum products that reflect our expertise and never-ending pursuit of excellence.