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New YorkWashington DCAtradius Country Report

United States – April 2014

Atradius 2

OverviewGeneral information Most important sectors (% of GDP, 2012)Capital: Washington,D.C. Services: 79.7 %

Governmenttype: Federalrepublic Industry: 19.1 %

Currency: USdollar(USD) Agriculture: 1.2 %

Population: 318.9million

Main import sources (2012, % of total) Main export markets (2012, % of total)China: 19.0 % Canada: 18.9 %

Canada: 14.1 % Mexico: 14.0 %

Mexico: 12.0 % China: 7.2 %

Japan: 6.4 % Japan: 4.5 %

Germany: 4.7 % UnitedKingdom: 3.5 %

Key Indicators

**

2011 2012 2013 2014* 2015*

RealGDP(y-on-y,%change) 1.8 2.8 1.9 2.8 3.1

Consumerprices(y-on-y,%change) 3.1 2.1 1.5 1.7 2.0

Personalconsumption(y-on-y,%change) 2.5 2.2 3.0 2.6 2.9

Retailsales(y-on-y,%change) 4.2 3.1 2.8 1.1 2.4

Industrialproduction(y-on-y,%change) 3.4 3.6 2.6 3.3 3.7

Unemploymentrate(%) 8.9 8.1 7.4 6.4 5.9

Businessinvestment(y-on-y,%change) 7.6 7.3 2.8 5.5 5.7

Exportofgoodsandnon-factorservices 7.1 3.5 2.7 5.5 6.2(y-on-y,%change)

Fiscalbalance(%ofGDP) -9.4 -8.1 -4.6 -4.8 -3.9

Governmentdebt(%ofGDP) 117.3 119.6 120.9 121.5 120.6

* forecast

Sources: Consensus Economics, IHS Global Insight

Main economic developments Growth slowed in the last quarter of 2013

AccordingtotheUSBureauofEconomicAnalysis(BEA),thequarterlyincreaseinrealgrossdomesticproduct(GDP)was

just2.6 %inQ4of2013,comparedtoa4.1 %quarterlyriseinQ3.Thisdecelerationingrowthismainlyattributableto

lowerstateandlocalgovernmentspendingandlessinvestmentasaconsequenceofthetemporarygovernmentshutdown

inautumn2013.However,privateconsumptionandexportscontributedpositivelytoGDP.TheUSeconomygrew1.9 %

in2013,butasurgeingrowthof2.8 %isexpectedin2014,and3.1 %in2015(seechartbelow)basedonrobustprivate

spendingandincreasinginvestmentandnetexports.

Source:ConsensusForecasts(SurveydateMarch11,2013)

Atradius 3

”The US is back on track to achieve robust economic growth in 2014 and 2015, based on consumer spending, investments and net exports. However, the labour market and political bickering over public finances remain potential stumbling blocks for long-term economic performance.“AtradiusEconomicUnit

(% change on previous year)

GDP growth

5

4

3

2

1

0

2011 2012 2013 2014* 2015*

1.8

2.8 2.8

1.9

3.1

Private consumption: push factors in 2014

Consumerconfidenceincreasedconsiderablyinthefirstsixmonthsof2013beforestabilising(seechartbelow).Private

consumptionincreased3.0 %,followinga2.2 %increasein2012.

Source:TheConferenceBoard;IHSGlobalInsight

Consumerwealthhasbeenboostedbyincreasinghomeprices.Thecollapseinhousepriceswasoneofthetriggersofthe

2008financialcrisis.Pricesbeganfallingin2006anddidn’tstabiliseuntil2009.Therecoveryinpricesstartedinearly2012

andcontinuedinto2013(seechartbelow).Generally,homepricesarenowincreasingacrossthecountry.Accordingto

theS&P/Case-Shillerindexofpropertyvaluesin20cities,homepriceshaveincreasedbymorethan20 %fromtheirlow

pointofearly2012.Housesalesarestillbenefitingfromlowpricesinmanyareasandlowmortgagerates.Homeowners

whohaveseentheirequityrisewillbemorelikelytoborrowandtospendwhile,atthesametime,delinquencyrateshave

stabilised.

Source:S&PCaseShiller;IHSGlobalInsight

Asin2012,householdfinancescontinuedtoimprovein2013,withconsumersreducingtheirdebtandimprovingtheir

debt-to-incomeratiooverthepastyear.Netwealthisalsomuchbetter,thankstobothlowerdebtandhigherassetvalues,

suchashousingandthestockmarket.Thisprovidesasolidfoundationforfurtherimprovementsinconsumerspending

growth.

Atradius 4

(Rebased house price level index)

National house price developments

Source: The Conference Board; IHS Global Insight

Consumer wealth has been boosted by increasing home prices. The collapse in house prices was one of the causes of the 2008 financial crisis. Prices began falling in 2006 and didn’t stabilise until 2009. The recovery in prices started in early 2012 and continued into 2013 (see chart below). Generally, home prices are now increasing across the country. According to the S&P/Case-Shiller index of property values in 20 cities, home prices have increased by more than 20% from their low point of early 2012. House sales are still benefiting from low prices in many areas and low mortgage rates. Home owners who have seen their equity rise will be more likely to borrow and to spend while, at the same time, delinquency rates have stabilised.

Source: S&P Case Shiller; IHS Global Insight

As in 2012, household finances continued to improve in 2013, with consumers reducing their debt and improving their debt-to-income ratio over the past year. Net wealth is also much better, thanks to both lower debt and higher asset values, such as housing and the stock market. This provides a solid foundation for further improvements in consumer spending growth.

According to the US Bureau of Labour Statistics, the unemployment rate increased to 6.7% in February 2013: up 0.1% from January, but down 1% year-on-year. IHS Global Insight expects unemployment to decrease to 6.4% in 2014 from 7.4% in 2013. However, much of this decrease is the result of people leaving the labour market rather than a growth in the number of jobs. The percentage of the potential work force actually employed has decreased: from 66% before the start of the credit crisis to its current 63%. The labour market therefore remains a potential weakness in the recovery of consumer confidence and spending.

Source: The Conference Board; IHS Global Insight

Consumer wealth has been boosted by increasing home prices. The collapse in house prices was one of the causes of the 2008 financial crisis. Prices began falling in 2006 and didn’t stabilise until 2009. The recovery in prices started in early 2012 and continued into 2013 (see chart below). Generally, home prices are now increasing across the country. According to the S&P/Case-Shiller index of property values in 20 cities, home prices have increased by more than 20% from their low point of early 2012. House sales are still benefiting from low prices in many areas and low mortgage rates. Home owners who have seen their equity rise will be more likely to borrow and to spend while, at the same time, delinquency rates have stabilised.

Source: S&P Case Shiller; IHS Global Insight

As in 2012, household finances continued to improve in 2013, with consumers reducing their debt and improving their debt-to-income ratio over the past year. Net wealth is also much better, thanks to both lower debt and higher asset values, such as housing and the stock market. This provides a solid foundation for further improvements in consumer spending growth.

According to the US Bureau of Labour Statistics, the unemployment rate increased to 6.7% in February 2013: up 0.1% from January, but down 1% year-on-year. IHS Global Insight expects unemployment to decrease to 6.4% in 2014 from 7.4% in 2013. However, much of this decrease is the result of people leaving the labour market rather than a growth in the number of jobs. The percentage of the potential work force actually employed has decreased: from 66% before the start of the credit crisis to its current 63%. The labour market therefore remains a potential weakness in the recovery of consumer confidence and spending.

(Index 100 = Neutral)

Consumer confidence

AccordingtotheUSBureauofLabourStatistics,theunemploymentrateincreasedto6.7 %inFebruary2013:up0.1 %

fromJanuary,butdown1 %year-on-year.IHSGlobalInsightexpectsunemploymenttodecreaseto6.4 %in2014from

7.4 %in2013.However,muchofthisdecreaseistheresultofpeopleleavingthelabourmarketratherthanagrowthinthe

numberofjobs.Thepercentageofthepotentialworkforceactuallyemployedhasdecreased:from66 %beforethestartof

thecreditcrisistoitscurrent63 %.Thelabourmarketthereforeremainsapotentialweaknessintherecoveryofconsumer

confidenceandspending.

Source:IHSGlobalInsight

TheUSconsumerpriceindexdecreasedto1.5 %in2013from2.1 %in2012.In2014consumerpricesareforecastto

increasemodestly,by1.7 %.

Source:IHSGlobalInsight

Despitethecontinuedfragilityofthelabourmarketrebound,consumerspendingiscurrentlyforecasttoincrease2.6 %in

2014and2.9 %in2015(seechartoverleaf).Thegrowthisexpectedtobesupportedbyincreasedhomeprices,abuoyant

stockmarketandrelativelylowconsumerpriceinflation.Retailsalesareexpectedtoincrease1.1 %in2014and2.4 %next

year.

Atradius 5

(Annual percentage change)

Consumer price inflation

The US consumer price index decreased to 1.5% in 2013 from 2.1% in 2012. In 2014 consumer prices are forecast to increase modestly, by 1.7%.

Source: IHS Global Insight Despite the continued fragility of the labour market rebound, consumer spending is currently forecast to increase 2.6% in 2014 and 2.9% in 2015 (see chart below). The growth is expected to be supported by increased home prices, a buoyant stock market and relatively low consumer price inflation. Retail sales are expected to increase 1.1% in 2014 and 2.5% next year. Bitte Graphik einfügen Personal consumption (% change on previous year) Source: Consensus Forecasts (Survey date 11 March 2013)

(Percentage points)

Unemployment and participation

The US consumer price index decreased to 1.5% in 2013 from 2.1% in 2012. In 2014 consumer prices are forecast to increase modestly, by 1.7%.

Source: IHS Global Insight Despite the continued fragility of the labour market rebound, consumer spending is currently forecast to increase 2.6% in 2014 and 2.9% in 2015 (see chart below). The growth is expected to be supported by increased home prices, a buoyant stock market and relatively low consumer price inflation. Retail sales are expected to increase 1.1% in 2014 and 2.5% next year. Bitte Graphik einfügen Personal consumption (% change on previous year) Source: Consensus Forecasts (Survey date 11 March 2013)

Source:ConsensusForecasts(Surveydate11March2013)

Industrial production growth expected to improve

Afterfalling11.4 %in2009,USindustrialproductionreboundedin2010-2013.Thoughthegrowthrateslowedto2.6 %

lastyear,industrialproductiongrowthisforecasttorise3.3 %in2014and3.7 %and2015.

Source:ConsensusForecasts(Surveydate11March2013)

Businessconfidenceinthemanufacturingindustryincreasedin2013,butfellagaininearly2014.

Source:IHSGlobalInsight

Atradius 6

Industrial production growth expected to improve After falling 11.4% in 2009, US industrial production rebounded in 2010-2013. Though the growth rate slowed to 2.6% last year, industrial production growth is forecast to rise 3.3% in 2014 and 3.7% and 2015. Bitte Graphik einfügen Industrial production (% change on previous year) Source: Consensus Forecasts (Survey date 11 March 2013) Business confidence in the manufacturing industry increased in 2013, but fell again in early 2014.

Source: IHS Global Insight Business investment set to improve Business investment growth slowed in 2013 but is set to improve in 2014 and 2015 (see chart below). Bitte Graphik einfügen Business investment (% change on previous year) Source: Consensus Economics (Survey date 11 March 2013)

(% change on previous year)

Personal consumption

5

4

3

2

1

0

2011 2012 2013 2014* 2015*

2.52.2

2.63.0 2.9

(% change on previous year)

Industrial production

5

4

3

2

1

0

2011 2012 2013 2014* 2015*

3.63.3

2.6

3.73.4

(Manufacturing industry index, non-additive or stock figures)

Business confidence

Business investment set to improve

Businessinvestmentgrowthslowedin2013butissettoimprovein2014and2015(seechartbelow).

Source:ConsensusEconomics(Surveydate11March2013)

Stronger export growth in 2014 and 2015

AccordingtoIHSGlobalInsight,USexportsincreased2.7 %in2013,andwillaccelerateto5.5 %in2014and6.2 %in

2015.TheUScurrentaccountdeficit,whichwas2.3 %ofGDPin2013,isforecasttodecreaseto1.7 %ofGDPin2014.The

improvementofthecurrentaccountislargelytheresultoftheenergyrevolutionintheUS,aslarge-scaleexploitationof

shaleoilandgasgreatlyreducestheneedforenergyimports.

Source:BureauofEconomicAnalysis;IHSGlobalInsight

Atradius 7

(% change on previous year)

Business investment

10

8

6

4

2

0

7.3

5.5

2.8

5.7

2011 2012 2013 2014* 2015*

7.6

(Annual percentage change)

Growth in trade volumes: real imports and exports

Stronger export growth in 2014 and 2015 According to IHS Global Insight, US exports increased 2.7% in 2013, and will accelerate to 5.5% in 2014 and 6.2% in 2015. The US current account deficit, which was 2.3% of GDP in 2013, is forecast to decrease to 1.7% of GDP in 2014.

Source: Bureau of Economic Analysis; IHS Global Insight Despite short-term solutions, the public deficit reduction remains an issue As a result of the 2008 financial crisis, both government debt and the budget deficit increased sharply in 2009-2011 (see chart below).

Source: Bureau of Economic Analysis; IHS Global Insight Despite the recent passing of the 2014 federal budget, the political struggle over government finances remains a potential risk to the US economic outlook in the mid and long term. The bickering between Republicans and Democrats in the US Congress last year over government policy and the fiscal budget, and their unwillingness to make concessions on debt negotiations, has proved a stumbling block to comprehensive budget consolidation, with an adverse effect on consumer and business confidence and economic growth.

Despite short-term solutions, the public deficit reduction remains an issue

Asaresultofthe2008financialcrisis,bothgovernmentdebtandthebudgetdeficitincreasedsharplyin2009-2011

(seechartbelow).

Source:BureauofEconomicAnalysis;IHSGlobalInsight

Despitetherecentpassingofthe2014federalbudget,thepoliticalstruggleovergovernmentfinancesremainsapotential

risktotheUSeconomicoutlookinthemidandlongterm.ThebickeringbetweenRepublicansandDemocratsintheUS

Congresslastyearovergovernmentpolicyandthefiscalbudget,andtheirunwillingnesstomakeconcessionsondebt

negotiations,hasprovedastumblingblocktocomprehensivebudgetconsolidation,withanadverseeffectonconsumer

andbusinessconfidenceandeconomicgrowth.

TheclashbetweenRepublicansandDemocratsledtoatemporaryshutdownofthegovernmentinautumn2013.Asthe

fiscalyearendedon30September,withnoagreementonthefiscalbudgetforthefollowingyear,about800,000non-

essentialgovernmentpersonnelweresenthomeandgovernmentagencieswereclosed–forthefirsttimesince1996.

Theshutdownendedon17Octoberwhenanewbudgetwasagreedinthefaceofthemuchmoreseverebreachofthe

governmentdebt-ceiling.Atthattime,theUSgovernmenthadreachedthemaximumamountthatitcouldborrowand,

unlesstheceilingcouldberaised,thegovernmentwouldhavebeenforcedtolivewithinitsmeans.However,sincethe

governmentwasthenrunningabudgetdeficitofaround3.5 %ofGDP,itwouldhavebeenunabletopayallitsbills-or

worse,unabletofulfilitsdebtobligations.Theformerwouldhaveledtoadeeprecession,whilethelatterwouldconstitute

anofficialgovernmentdefault.

InDecember2013Congresspassedthenewfiscalbudgetfor2014,buthasnotyetreachedalong-termsolutionasthe

agreementswapssomenear-termspendingcutsforspendingcutslateranddidnotincludeafinalsettlementofthe

governmentdebtceilingissue.However,inFebruarythisyear,Congressapprovedanotherincreaseofthecountry‘sdebt

ceilinguntilMarch2015.

Less expansionary monetary policy, but interest rates remain low

GiventheresilienceoftheUSeconomy,inDecemberlastyeartheUSFederalReserve(Fed)decidedtoreduceits

expansionarymonetarypolicywitheffectfromJanuary2014.Upuntilthen,theFedhadboughtassetsworthUS$85

billioneverymonthtosupporttheeconomy.InJanuary2014thisamountwasloweredbyUS$10billionandthenin

FebruaryitwasloweredagainbyanotherUS$10billionbringingthemonthlypurchaseofbondstoUS$65billion.

AnotherUS$10billionreductionwasannouncedinMarch,whichwilltakeeffectinApril2014bringingthemonthly

bondpurchasedowntoUS$55billion.

Atradius 8

(Government debt and budget balance in percent of GDP)

Public debt and budget balance: United States

Stronger export growth in 2014 and 2015 According to IHS Global Insight, US exports increased 2.7% in 2013, and will accelerate to 5.5% in 2014 and 6.2% in 2015. The US current account deficit, which was 2.3% of GDP in 2013, is forecast to decrease to 1.7% of GDP in 2014.

Source: Bureau of Economic Analysis; IHS Global Insight Despite short-term solutions, the public deficit reduction remains an issue As a result of the 2008 financial crisis, both government debt and the budget deficit increased sharply in 2009-2011 (see chart below).

Source: Bureau of Economic Analysis; IHS Global Insight Despite the recent passing of the 2014 federal budget, the political struggle over government finances remains a potential risk to the US economic outlook in the mid and long term. The bickering between Republicans and Democrats in the US Congress last year over government policy and the fiscal budget, and their unwillingness to make concessions on debt negotiations, has proved a stumbling block to comprehensive budget consolidation, with an adverse effect on consumer and business confidence and economic growth.

Whilethesearethefirststepstowardsaconclusionoftheassetpurchaseprogramme,theverylowbenchmarkinterestrate

of0.25 %willremainunchangedforawhile,despitetherecentimprovementintheunemploymentrate.InMarch2013the

Fedstatedthatitwilldropitspreviousthresholdforabenchmarkinterestincrease–anunemploymentlevelof6.5 %-and

insteadtakeintoaccountamixoffactors,suchaslabourmarketconditions,inflationexpectationsandfinancialmarkets

development,beforemakinganydecisiononincreasinginterestrates.

The insolvency environmentUS corporate insolvencies expected to decrease – but will still be above pre-crisis levels

Afteryear-on-yearincreasesofmorethan40 %in2007and2009,thenumberofcorporateinsolvencieshasdecreased

eachyearsince.AccordingtothelatestfiguresprovidedbytheUSCourts,thenumberofbusinessbankruptciesfiledin

federalcourtsfell17.1 %year-on-yearin2013:to33,212cases.Weexpectthispositivedownwardtrendtocontinueinto

2014,althoughlesssteeply(by5 %),whilethenumberofinsolvenciesshouldremainabovepre-creditcrisislevels(forecast

tobearound31,550casesin2014comparedto28,300in2007).

Source:AdministrativeOfficeoftheU.S.Courts;IHSGlobalInsight

Source:AdministrativeOfficeoftheU.S.Courts;AtradiusEconomicResearch

Atradius 9

(1-year trailing sum of insolvency counts based on quarterly data)

Insolvency trends: United States

Source: Administrative Office of the U.S. Courts; IHS Global Insight US business insolvencies (year-on-year change)

Bitte Graphik einfügen Source: Administrative Office of the U.S. Courts; Atradius Economic Research Default risk for US listed firms back to pre-credit crisis levels

The monthly median expected default frequency (EDF) figure for US listed companies decreased from 0.4% in January 2013 to 0.26% in January 2014, reaching levels recorded before the start of the 2008 credit crisis. This improvement is due mainly to the continued rebound of the US economy, a rise in equity prices and a simultaneous reduction in market volatility. Source: KMV Credit Monitor and Atradius Economic Research

% change

0 0

40,000 40,000

20,000 20,000

60,000 60,000

80,000 80,000

2010

-7.5 %

56,282

2011

-15.1 %

47,806

2012

-16.2 %

40,075

2007

43.8 %

28,322

2008

50.2 %

42,546

2009

43.0 %

60,837

2013

-17.1 %

33,212

2014*

-5.0 %

31,550

*forecast

(year-on-year change)

US business insolvencies

Default risk for US listed firms back to pre-credit crisis levels

Themonthlymedianexpecteddefaultfrequency(EDF)figureforUSlistedcompaniesdecreasedfrom0.4 %inJanuary

2013to0.26 %inJanuary2014,reachinglevelsrecordedbeforethestartofthe2008creditcrisis.Thisimprovementis

duemainlytothecontinuedreboundoftheUSeconomy,ariseinequitypricesandasimultaneousreductioninmarket

volatility.

Source: KMV Credit Monitor and Atradius Economic Research

*TheExpectedDefaultFrequency(EDF)chartaboveisbasedonlistedcompaniesinthemarketsreferredto,andthelikelihoodofdefaultacrossallsectorswithinthe

nextyear.Inthiscontext,defaultisdefinedasafailuretomakeascheduledpayment,ortheinitiationofbankruptcyproceedings.Probabilityofdefaultiscalculated

fromthreefactors:marketvalueofacompany’sassets,itsvolatilityanditscurrentcapitalstructure.Asaguide,theprobabilityofonefirminahundreddefaultingon

paymentisshownas1 %.

US industries performance forecastApril 2014

Atradius 10

Median EDF evolution by country*

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Perc

ent

Median EDF evolution by country*

Germany

Italy

United Kingdom

United States

France

Agriculture

ConsumerDurables

Metals

Automotive/Transport

Electronics/ICT

Paper

Chemicals/Pharma

Financial Services

Services

Construction

Food

Steel

ConstructionMaterials

Machines/Engineering

Textiles

Excellent

Good

Fair

Poor

Bleak

Developments in some main sectorsAutomotive

IntheUS,carsaleshaveincreasedsteadilyoverthelastcoupleofyearsand2014ispredictedtobeanotherstrong

year.Thebigthreeoriginalequipmentmanufacturers(OEMs)-Ford,GMandChrysler-allproducedsignificantlybetter

financialresultsin2013,andthishasfilteredthroughthesupplychain.Whilethissectoriscyclicalanddependsonthe

broadereconomy,theperformanceoutlookforthenext12monthsisfairlyoptimistic.

Financialconditionsarereasonablygood.Aswellasgrowthinsalesandproduction,capitalmarketshavemoreappetitefor

automotiveproducers’andsuppliers’risk.Whilethesector’sdependenceonbankfinanceisgenerallyhigh,overallbusiness

indebtednessismanageableandbanksarethereforewillingtoprovidecredit.

Onaverage,paymentsintheUSautomotiveindustrytakebetween60and90days.Agreedpaymenttermshavebeen

extended,especiallyforlargerautomotiveretailstores:inmanycasestoasmuchas360days.Overthepasttwoyearswe

haveseenapositiveandstablepaymenttrendintheautomotivesector,andexpectthistocontinueinthecomingmonths.

Thenumberofinsolvencieshasdecreasedandwillcontinuetodoso,inlinewiththeoverallpatternofUSbusiness.

TheUSautomotivesectorishighlycompetitiveineverysubsector,butentrybarriersarequitehigh.Whileourunder-

writingstanceisincreasinglyrelaxed,weneedtobemindfulofconcentrationriskasthesectorishighlydependentonthe

futureperformanceoftheeconomy,bothintheUSandglobally.

Construction

Overrecentyearswehavehadtobefairlyselectiveinourcoverontheconstructionindustryasitwasamongthehardest

hitduringtherecession-andtheslowesttorecover.However,thereboundthatbeganin2012continuedthroughout2013

andthereisnowscopetoconsidermorecoverforthesector.

PaymentsintheUSconstructionindustrytake30-60daysonaverage,while90daytermsarenotuncommon.Wearestill

seeingamixtureofpromptandslowpaymenttrends,dependingonthespecificindustrysubsector.Privateconstruction

companiesandgeneralcontractorstypicallyexperiencemostoftheslowpayments,asdocompaniesthatsellandlease

constructionmachineryandequipment.Butoverall,thenumberofnotificationsoflatepaymentthatwereceivehas

decreasedoverthelastyear.Weexpectincidentsoflatepaymenttofallfurtherin2014asthemarketgraduallyrecovers.

ThesamegoesforUSconstructioninsolvencies,whichimprovedlastyear.However,manycompanieshavenotrecovered

fromtheprolongeddownturnandso,despitetheimprovement,westillexpecttoseeanoticeablenumberofinsolvencies

intheconstructionindustrythisyear.Since2009constructionhashadahigherrateofdefaultsandinsolvenciesthanother

USindustries.Privateresidentialcontractors,publicandprivatecommercialcontractors,andhardwarestoreshaveseen

slightlymoreinsolvencies,worseningtheindustryaverage.Nevertheless,weexpectthenumberofconstruction

insolvenciestodecreasethisyear.

Constructionactivityshouldincreasein2014.Thehousingmarket,recoveringfromrecordlows,initiallypavedtheway

forconstructiongrowth.Nowmanynon-residentialbuildingmarketsareturningthecornertoo:makingforoptimistic

2014forecasts.Innon-residential/commercialconstructionthereismoreactivityinbridges,hotels,retailoutlets,and

warehouses.Inthecaseoflargeconstructiondeals,thereisahighdependencyonbankfinancingand,whileinrecent

yearsithasbeendifficulttosecurebankcredit-especiallyforlargeconstructiondeals-weareseeingthisbarriereasing.

However,federalgovernmentbudgetcutsandotherrestraintshavehurtcommercialcontractorsandprojects.Concerns

overtheAffordableHealthCareActhaveslowedconstructionactivityinthehealthcaresectorsignificantly.

Atradius 11

Food

Onaverage,paymentsintheUSfoodindustrytake30days.Whilepaymentdelaysandinsolvenciesincreasedinthe

secondhalfof2013,weexpectthistrendtostabilisethisyear.Forthefoodsectoroverall,ourunderwritingpolicyis

relaxed,althoughwetakeextracarewithsubsectorsthatmayfeeltheimpactofcommoditypricesontheirproduction

costs,asthiswilldeterminethepricepaidbyconsumersandconsequentlythelevelofdemand.Wealsotakeaccountof

one-offeventssuchasaspikeinfeedpricesformeatproducersandtheGulfoilspillin2010:whichhadasignificant

impactonseafoodproducersinthatregion.

Atradius 12

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