Improving Economy Headed into Memorial Day | NBWA: America's Beer and Beverage Distributors

With the Memorial Day weekend fast approaching, there are many signs that the beer market can overcome its first quarter doldrums. Putting the hopes of warm, sunny and pleasant weather aside, basic economics also should lend a hand to second quarter volumes.

 An improving economy continues into its eighth year of expansion following the 2007-2008 recession. Across a broad collection of economic statistics, the data continue to post lower unemployment rates coupled with modest wage growth. The April 2017 unemployment rate sits at 4.4 percent. While lower labor force participation is recognized as a problem, the reality is that the retirement of baby boomers and tail end of the millennial generation that is still in school will continue to suppress the labor participation below historical averages. With more people working and growing wages, the industry has greater opportunity to move more beer.

Improving Economy Heading into Summer - April Unemployement Rate and Wage Growth

It is now widely recognized that the low interest rate environment has driven an overbuilding in retail and related employment during the current expansion. With a retail slowdown on the horizon, manufacturing and industrial production are now set to help carry the recovery forward.

Manufacturing employment and industrial production have both seen a rebound in late 2016 after spending most of 2015 trending down. More importantly for beer, a broader based recovery into manufacturing and durable goods should have a greater impact on a broader spectrum of beer segments. We have already seen a hint of this dynamic in the slowdown of high-end brands and marginal improvements in sub-premium and premium-light volumes.

Improving Economy Heading into Summer: Manufacturing Rebound and Industrial Production

The fundamentals and dynamics of the current expansion are changing for the country. The beer industry will reflect these changes in the performance of segments and brands. As Memorial Day weekend marks the unofficial start of summer and the beer drinking season begins, brewers, distributors and retailers can set their sights on new opportunities for growth in 2017.