U.S. manufacturers are likely to see a hit to their quarterly profit in the second half of the year as higher prices for everything from light bulbs to air conditioners take a toll on consumer spending.
Wall Street analysts fear the second quarter would be the last three months of a good spell that began during the pandemic as consumers used stimulus checks to buy products of 3M Co, Emerson (NYSE:EMR) Electric Co, Eaton (NYSE:ETN) Corporation Plc and Johnson Controls (NYSE:JCI).
High inventory levels combined with sluggish order growth are likely to hurt manufacturers’ revenue as analysts foresee a further slowdown in demand.
“Electrical orders momentum is likely to slow sharply, which is a risk that is under-appreciated by investors,” brokerage firm Barclays (LON:BARC) said.
The U.S. manufacturing and trade inventories rose 17.7% year-over-year to $2.38 billion in May, the U.S. Census Bureau data showed while the manufacturing activity slowed more than expected in June.
In its latest quarterly report, industrial products maker Dover Corp (NYSE:DOV) said bookings dropped 33% for its unit that serves commercial refrigeration, heating and cooling markets from a year earlier.
“We’ve been guiding for a year now that this can’t go on forever and orders are going to come down,” its Chief Executive Richard Tobin told analysts.
Dover’s peer 3M, which generates 17% of its revenue from the consumer segment, is set to report its results tomorrow.
