Author Archives: IHS

Japan: High Employee Bonuses in Manufacturing Until Inflation Picks Up

Spend Matters welcomes this guest contribution from Irene Lauro, senior economist at IHS Markit.

In Japan, labor shortages and rising productivity are not leading companies to increase ordinary wages. Signs of a Japanese economic recovery have started to appear in rising corporate profits and falling unemployment. A meaningful pickup in wage growth, however, is not in the cards, as corporates are reluctant to lift ordinary earnings because of uncertainty about the economic outlook.

Insatiable Ride-Hailing Companies Bite into Rental Car Demand


Spend Matters welcomes this guest post from Kayla Bruun, senior economist at IHS Markit.

Despite the seemingly favorable demand-driving conditions of a robust job market, low fuel prices and an upward trend in domestic travel spending, rates for U.S. passenger rental cars as measured by the producer price index have declined 31% since the third quarter of 2014. Concurrently, rising fleet costs attributable to a supply glut in the used car market are overwhelming rental car firms' cost savings from automation initiatives and low gas prices. This suggests that rental car prices are falling due to a mismatch between supply and market demand, not as a result of lower input costs flowing through.

Aircraft Prices Taxiing Toward Take Off

Spend Matters welcomes this guest post from Brandon Ruschak, senior economist at IHS Pricing and Purchasing Service.

Aircraft prices are expected to accelerate in the second half of 2017, a turnaround from the weak price growth that has occurred for several years. Low price growth emerged in 2013 due to the retrenchment of key input costs for aircraft manufacturing, but this trend has recently shifted. Rising input cost prices will contribute to the pricing turnaround to occur later in the year. Aluminum prices will move higher over the next two years, putting upward pressure on aircraft prices. Additionally, tightening labor markets are forcing up wages, adding more upward price pressure.

America Needs a Bigger Closet


Spend Matters welcomes this guest post by H. Cole Hassay, economist at IHS Markit.

Americans need more space to store their goods, according to warehouse construction data. Warehouse construction rose in 2016 by 8%, coming off three years of double-digit growth as consumers continue to demand more storage space. Rising demand, along with historically low interest rates, prompted this construction explosion. Though the Federal Reserve has signaled interest rates will be rising in the near term, warehouse construction should remain positive, though less dramatic, as demand persists.

A Fleeting Manufacturing Boom Underway in the UK


Spend Matters welcomes this guest post from by Ben Orhan, senior economist with IHS Pricing and Purchasing.

The U.K. manufacturing sector is enjoying a considerable renaissance following sterling's slump over the last few months. A fall of around 15% against the euro since June has aided U.K. manufacturers considerably, with British imports suddenly offered at a relative discount for foreign buyers.

Affordable Hotel Rooms Get More Expensive


Spend Matters welcomes this guest post from H. Cole Hassay, economist, pricing and purchasing, at IHS Markit.

The hotel industry experienced healthy demand this past summer. With this strong demand, hotels with the least amenities increased the most in price, as limited-service hotels became more expensive in the United States. While the typical surge in demand from summer travel was partially responsible for a normal seasonal upturn, there were other factors at play, too.

King Coal is Losing its Crown

Spend Matters welcomes this guest post from Ben Orhan, senior economist at pricing and purchasing, IHS Markit.

Coal demand is in a near-constant downward cycle as gas-powered plants usurp coal's once-unassailable dominance. As a result, prices have been under immense pressure, and only in the third quarter of 2016 has there been any sizable price increase. We expect that without substantial shifts in market fundamentals, this low inflation environment will persist through 2016 and into 2017.

Cement and Concrete: Stable Prices for the Rest of 2016

Spend Matters welcomes this guest post from Deni Koenhemsi, economist at pricing and purchasing, IHS Markit.

Cement and concrete prices are mostly flat in the fourth quarter. They are forecast to rise once again in the first few months of 2017. After two rounds of price increases in January and April, prices of cement are forecast to slow down in the third quarter and stay flat for the fourth quarter. Looking into 2017, price escalation is not expected to slow dramatically. We expect another round of price increases in January and April, but the growth level will be slower compared with 2015 and 2016.

Paper Prices Remain Soft Despite Supply Cuts

Spend Matters welcomes this guest post from Karolina Tomczyk, senior economist at pricing and purchasing, IHS Markit.

The buying environment for paper will return to balance in the second half of 2016. Sellers have likely already implemented most price increases across several grades, taking advantage of recent changes in supply flows. These price increases were only a partial implementation of their intended hikes, as buyers did not perceive the market as tight enough and resisted significant increases. Moreover, considering the ongoing decline in demand for graphic papers, it is unlikely that these price increases will hold — IHS Markit expects downward price pressure to return in the second half of 2016.