Sales of heavy duty trucks rose in February, pointing to a turnaround in the trucking industry.
North American orders for trucks in the heaviest Class 8 weight segment rose 28 percent to 22,900 vehicles compared with the same month a year earlier, according to FTR Transportation Intelligence. February’s order level was 5 percent above January.
“Orders have increased for four straight months, indicating the market is making a solid recovery after the second-half slump in 2016,” said Don Ake, vice president of commercial vehicles at FTR.
The steady order trend pushed backlogs to over 100,000 units for the first time since June 2016, the research firm said.
“Freight is starting to pick again after sagging some in 2016. Rates are climbing and fleets are feeling much more confident about business going forward,” Ake said. “Truck builds and sales should now begin a modest upturn which should continue throughout this year.”
The rebound is good news for truck manufacturers. The industry slashed production and laid off thousands of workers in the U.S. last year.
Class 8 orders for the past three months translate to an annualized sales pace of 263,000 units, Ake said. Class 8 truck sales fell to 216,000 last year after reaching 278,000 in 2015.
“This is what a turning point looks like,” Ake said.
ACT Research says the boost in February represents a 14-month high and a second consecutive month of Class 8 orders rising above most analysts expectations.
Analysts had expected lowers numbers because they were getting caught up in “an optical illusion,” said Kenny Vieth, president and senior analyst for ACT.
“While the forecast for 2017 is below what actually transpired in 2016, we have to break the market down into quarters,” he said.
Last year the industry built trucks at a seasonally adjusted annual rate of 296,000 in the first quarter and 193,000 in the fourth quarter, generating full-year build of 228,300 units, Vieth said.
“In 2017, we will see the reversal of that trend with a first quarter annual production rate of around 200,000 units, and a build rate in the neighborhood of 230,000 at the end,” Vieth said. “Ending 2017 with a stronger build rate is a more meaningful way to close out the year despite an expected year-over-year decline.”
Still, J.P. Morgan industry analyst Ann Duignan is forecasting production of about 200,000 Class 8 trucks this year, down 12 percent from 2016.
The outlook for trucks in the Class 5 through 7 weight segments is better. Duignan forecasts production will rise 3 percent from the 2016 level to 240,000 units.
Other analysts are taking an increasingly positive view of the trucking industry.
“Orders have continued to build sequentially despite general seasonal patterns that would indicate a modest decline,” said Michael Baudendistel, an analyst at Stifel Financial Corp.
Stifel has increased its 2017 production estimate from 200,000 vehicles to 215,000.
“We continue to become more positive on the truck equipment space as a whole,” Baudendistel said in a report to investors.