Recovery Off to an Encouraging Start

2010-1-4 9:10:48

The latest GDP report indicated that the U.S. economy started a widespread recovery in the third quarter. After adjusting for inflation, total GDP expanded at an annual rate of 3.5%. This halted a string of four consecutive quarterly declines. But while the recovery is off to an encouraging start, it must be noted that much of the growth last quarter was tied to fiscal supports. Temporary government stimulus in the housing and auto sectors added 2 percentage points to this growth. Thus, we expect some deceleration in the fourth quarter.

Consumers are the driving force in any economic recovery, but too many are still constrained by declining incomes and rising unemployment. The monthly employment data will stabilize in the first quarter of 2010, and begin to grow in the second. This will be the signal to manufacturers to ramp up production. The early phase of the recovery may be stronger than anticipated because manufacturers continue to slash inventories. Real manufacturing inventories declined by $46.6 billion at an annual rate in the third quarter, the fifth decline in the past six quarters. Lean inventories combined with a gradual improvement in final demand will set the stage for overall production increases in 2010.

October’s MBI is 45.8, a 9.4-point decrease from the previous month and a 1.4-point decrease from September of last year. This decline does not reverse the overall trend of a moderate rise in the data in recent months, but it does indicate that the early stages of the current recovery will be characterized by fits and starts. Most of the measures were negative when compared with the previous month. The downward pressure on Mold Prices moderated, while Materials Prices were higher. Future Expectations slipped to a still-optimistic 61.4.

After two months of gains, the number of New Orders of molds shrank. Production activity continued to rise moderately. The Employment component is also indicating that there was another rise in overall payrolls. Fewer new orders combined with increased production pushed backlogs down.

 

October 2009
	% Positive	% Equal	% Negative	Net % Difference	Sub- Index
New Orders	27	23	50	-23	38.6
Production	36	37	27	9	54.5
Employment	27	55	18	9	54.5
Backlog	23	31	46	-23	38.6
Export Orders	0	91	9	-9	45.5
Supplier Deliveries	0	86	14	-14	43.2
Materials Prices	23	72	5	18	59.1
Mold Prices	23	45	32	-9	45.5
Future Expectations	46	31	23	23	61.4

Source: http://www.moldmakingtechnology.com

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