Weaker Economic Growth Expected as Housing Markets Drag Economy Down

August, 2007
For immediate release

Arlington Heights, IL USA--The Air Movement and Control Association International, Inc. (AMCA) released a Quarterly Forecast Newsletter for the third quarter of 2007 authored by consulting economist, Hans Zigmund. The air movement and control industry's principal economic indicators continue to provide mixed results contributing towards a continued feeling of uncertainty about the economy's performance in the medium term. Housing markets continue to struggle. According to the U.S. Census Bureau, February new housing starts and new building permits are down over 27%. Housing starts historically provide a strong leading indicator of future industry activity.

On the other hand, industrial capacity utilization rates continue to remain high. The June 2007 Capacity Utilization Index reported by the Federal Reserve Board of Governors, was 81.69. This is only down slightly from 82.25 in June 2006. High rates of capacity utilization are generally a good sign for manufactures 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 percent against June 2006. The average growth rate for 2007 is 11.7 percent versus 2006. The strength of non-residential construction is the primary contributor to an upward revision of the 2007 growth estimate.

Shipments and bookings have outpaced expectations throughout the first half of 2007. Both the strength of non residential construction and the continuing upward pressure on the price of steel and other inputs in the production process continue to cause the value of non inflation adjusted shipments and bookings to climb. Since rising prices of production inputs are not likely to subside and all indications are that non-residential construction should remain strong the remainder of the year, the forecasts for 2007 have been revised upward.

Hans Zigmund
Consulting Economist
AMCA International Inc.

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