In our ever-changing world, yesterday’s solutions are not guaranteed to be tomorrow’s best option. We must constantly reevaluate not only our decisions but the tools we use to make those decisions. When evaluating your business or global trends, that includes assessing your leading indicators to ensure they are providing you the intelligence that is most pertinent to you.
At ITR Economics, we are continuously evaluating our indicators to ensure they are representing market trends and providing you with the information you need. To that end, you can expect to see changes to three ITR Trends Report™ indicators in 2021. These changes will be reflected in your ITR Trends Report, your leading indicator program, and your DataCast™ program.
US Crude Oil Futures Prices
Our oil price indicator will change to the Cushing, Oklahoma, Crude Oil Spot Price for West Texas Intermediate (“WTI”) grade oil. The 12/12 trends of this indicator and Crude Oil Futures Prices are nearly identical, so if you have used the latter in the past, you will find minimal disruptions. There are two main reasons for switching the indicator. One reason is that feedback from our customers indicated the WTI Spot Price was more pertinent to them. The second reason is that this price reflects the monthly average price instead of the last-day-of-the-month price that is captured in US Crude Oil Futures Prices. The monthly average will smooth out any anomalies that are not representative of a larger trend.
US Natural Gas Futures Prices
This will be changed to the US Henry Hub Natural Gas Spot Price. The reasoning behind this change mirrors that of the oil price indicator change. The 12/12 trends of US Natural Gas Futures Prices and the Henry Hub Natural Gas Spot Price are very similar. In addition, using the monthly average instead of an end-of-month price will smooth out some of the inherent volatility in the data that is not representative of broader, overarching trends.
US Industrial Machinery New Orders
This will be changing to US Machinery New Orders. Oh, the difference one word makes! Industrial Machinery (NAICS 3332) is not nearly as encompassing as the title implies. The Industrial Machinery New Orders indicator includes machinery used in specific industrial end-use markets such as food production and woodworking. In contrast, US Machinery New Orders (NAICS 333) captures the wider market. Industrial Machinery New Orders account for roughly 10% of the total US Machinery New Orders trend, and we have found the broader category to be more representative of the activity our clients are experiencing.
We are excited to bring these changes to you in 2021, and we remain vigilant in our role as your trusted advisor, providing you with information you can use to shape your future.
Director of Economics