The old saying is still quite accurate: Life is what happens when one is making plans. The economic issues facing the insulation industry are always complex, but they are not usually this unpredictable. Current global volatility comes through when surveys like the ones from S&P Global, the Institute for Supply Management, Fabricators and Manufacturers Association (FMA), etc. are conducted. It can be seen in the Purchasing Managers’ Index and in much of the data from sources like the Federal Reserve, the Labor Department, and others. At the end of June, the world was trying to determine how real the
U.S. peace deal with Iran would prove to be, and when there might be a return to some sense of normalcy in the oil markets. The basic problem is that many sectors are just stuck in a “wait and see” position. The price per barrel of oil jumps from $70 to $120 in a couple of days and then falls back again. Freight costs are heading back to the bad old days of the pandemic, with container prices up by 62% in just a month. That increase has had a profound impact on all sectors of construction and manufacturing. Still, in spite of all this chaos and uncertainty, there are some hints of good news.

We can start with a look at the capacity front. This is a measure of how efficiently a company is performing, and it can be a shorthand means by which to judge whether there is solid business growth. Ideal capacity usage is between 80% and 85%, as this range signals that there is little slack in the operation, with small indication of bottlenecks. Nationally, the level of capacity utilization has been in the low 70s, which is a bit higher than it was in late May. When utilization is under 80%, there is relatively little purchasing of new equipment and reduced hiring. When it crests over 85%, there will be shortages and stress but that also triggers more acquisition and more employment to meet demand.

Another solid indicator for business is new order levels. It is one thing to keep responding to existing customers, but gaining new orders is a sign of growth and expansion. New order activity is tracked in a variety of ways—everything from data collected in the Purchasing Managers’ Index to more industry-focused studies. The data shows that new order activity increased by 42.66% in the last quarter, and that is a faster pace than the previous quarter’s. A slightly smaller number of businesses (40.22%) saw their new order activity remain stable. Only 17.12% saw that activity decline. Given all the stress from inflation and the upsets in the supply chain of late, these are very good numbers.

There has been some good news as far as employment is concerned as well. The labor
situation for manufacturers and construction has been complex for many years. By now you have heard the economists who threaten the “mother of all recessions” by 2030. In reality, predicting that far out is next to impossible; so what they are really warning is a demographic meltdown, as every Boomer reaches retirement age (all 72 million of them). There is already a labor shortage, and it stands to get worse, as there are just too few people with the skills needed in their fields. In a recent FMA survey of small and medium-sized manufacturers, 33.06% of respondents reported that they were hiring, and another 57.45% were stable as far as employment numbers were concerned. Only 9.49% saw their employment numbers decline. The fact is that companies are worried about losing the people they need and will tend to keep their payroll numbers up, even when there is economic stress. That has been a key to the stable employment data. Companies would likely have reduced their staff in response to the economic challenges, but they are afraid that they will not be able to hire the people they need when there is a rebound. Thus, the strong incentive to hang on to skilled workers even when business slows down.

The other set of sharp price hikes was seen in logistics, which comes as no shock. The readings from an FMA survey of small to medium-sized manufacturers showed that 84.55% saw increased logistics costs. The oil shock has driven the transportation sector into a pricing panic. The flatbed truck market is especially vulnerable to high diesel prices, and many of these operations have simply parked their trucks until prices calm. Right now, there are 80 loads available for every flatbed, and that has contributed to record costs for transportation at every level: truck, rail, ocean, and air. Only 15.18% of manufacturers reported stable logistics costs, and only 0.27% saw these costs come down. That is likely to be the story for many months to come.

Another sliver of positive news, though, is the appetite for capital equipment. In light of the labor shortage, there is increasing dependence on technology and machinery. One manufacturing survey reported that 51.63% of respondents are still on track to make such purchases in the second quarter of 2025, and 15.49% are delaying by just one quarter. Another 11.96% will delay by two quarters, while 20.92% have decided to delay indefinitely. This last number is up from previous quarters and signals that there is more uncertainty than had been the case earlier. As you look through the data on what kind of equipment companies are investing in, there are obvious trends. The equipment is set to replace what might have been done with labor, as the availability of workforce is limited. There is also a keen interest in robotics and the expansion of artificial intelligence.

The most encouraging news comes in response to questions about business outlook. In one major survey of manufacturers and industrial companies, fully 58.20% have a positive assessment of the business future, 33.33% saw a stable business environment, and only 8.47% expected conditions to worsen—a smaller percentage than reported pessimism in the previous survey. If there is an overall conclusion to be reached, it is that many companies remain upbeat regarding their future operations, despite the stress inflicted by inflation and labor shortages. There is acknowledgement of the pressures (especially in the supply chain), but overall growth is still expected.