Overdrive Extra

Max Heine

Recovery on the back burner

| May 18, 2009

As recently as April, manufacturing still looked mostly bad, notes the latest weekly roundup from Bob Costello, chief economist for the American Trucking Associations.

April output grew for autos, paper, wood products and nonmetallic mineral products. It shrunk for furniture, primary metal and fabricated metal products. From a year ago, manufacturing production was down 14 percent in April.

Inventory still has a ways to go before demand strengthens. The combined manufacturing, retail and wholesale trade inventories dwindled a little in March, but sales for the same group fell further. “The very important total business inventories/sales ratio remained unchanged at very high levels; thus, the current inventory correction will continue, which will be a further drag on truck freight volumes,” says ATA.

 A report this month from the Institute for Supply Management also was glum. “With operating capacity at 67 percent, an expected capital investment decline of 22.7 percent and prices expected to decrease 5.3 percent during 2009, manufacturers will need to focus on cost-cutting to offset lower revenue,” says ISM’s spring forecast.

ISM’s Norbert J. Ore summarized, “Given the significant decline in activity, 2009 shapes up as a very difficult year for U.S. manufacturers.”

Food, Beverage & Tobacco Products is the only manufacturing industry expecting a revenue increase in 2009, says ISM.

 – Max Heine