According to economist, Jim Meil of Eaton Corp., there are three very important leading indicators for the general condition of the economy in general and for fluid power specifically. The stock market is, of course, a sort of baromoter for the overall economy.
When you look at a chart of the S&P 500, it closely tracks to the GDP and industrial production of the overall economy. The deep drop in 2009 mirrors the decline in most of the markets served by fluid power technology. Now with the economy showing steady growth in 2010 and this year, the S&P reflects the same path.
Another key indicator is the yield curve between the 10-year Treasury Rates and the 90-day T-bills. Inevitably, when the 90-day value exceeds the 10-year, a recession is coming and it happed again with the Great Recession. The good news is that the 90-day is comfortably behind the 10-year which should indicate a period of growth.
Finally, the NFIB Small Business Optimism Index is up. With many small businesses included in the overal fluid power industry, this is another very positive sign that our recovery will continue. Mr. Meil made the point that fluid power sales and shipments in particular are experiencing very strong growth and, in fact, 2011 finds the industry still accelerating.
All of this is very good news for the fluid power industry and the entire supply chain.
