Weak output may presage slower growth

The economy showed signs of downshifting as manufacturing cooled last month and consumer spending slowed in September, bolstering expectations of weak growth into early next year.

11/02/2007


The economy showed signs of downshifting as manufacturing cooled last month and consumer spending slowed in September, bolstering expectations of weak growth into early next year.
Meanwhile, inflation remained flat in September, according to an inflation gauge that is closely watched by the Federal Reserve.

The latest survey by the Institute for Supply Management confirmed suggestions by the Fed this week that the economy would likely slow in the fourth quarter. Wednesday, the central bank lowered interest rates by a quarter percentage point.

Manufacturers "seem to have run out of our momentum at this point, as far as 2007 is concerned," said Norbert Ore, chairman of the ISM's manufacturing-survey committee.

The ISM's index of manufacturing activity slipped to 50.9 last month from 52 in September. The measure, based on a survey of purchasing managers, put manufacturing growth at its slowest pace since March, reflecting high inventories and rising prices for some materials and supplies. Readings above 50 indicate an expansion in manufacturing activity. Production, a subset of the overall index, plunged after eight months of growth. Strike-related disruptions among auto makers might have been partly to blame, analysts suggested.

Meanwhile, economic growth from abroad continues to prop up U.S. manufacturers. The ISM survey found export demand surging because of the weak dollar, while manufacturers' imports fell for the first time in nearly six years. The ISM found that manufacturing employment edged higher in October, a positive signal. "You're going to see very, very modest increases in manufacturing activity for a while," said Morgan Stanley economist David Greenlaw.

Firms may be feeling early signs of inflationary pressures. Manufacturers indicated they paid more for materials such as oil and steel in October. That could presage higher prices for consumer goods. Inflation had remained tame through much of this year, giving Fed officials latitude to lower interest rates at their last two meetings.

In a separate report, the Department of Commerce said the price index for personal-consumption expenditures rose 0.2% in September after being unchanged in August. Compared with a year earlier, the index gained 2.4%; the August increase was 1.8%.

The Fed's preferred inflation gauge -- the "core prices" which exclude volatile food and energy prices -- rose 0.2% in September after climbing 0.1% in August. Measured from a year earlier, core prices rose 1.8% in September, the same as in August. That puts inflation within the 1%-to-2% comfort zone of some Fed officials. The government said income rose 0.4% in September, the same as in August. Consumers showed signs of turning cautious, a potentially worrisome signal for the holiday shopping season. Consumer spending rose 0.3% in September -- the slowest since June -- after rising 0.5% in August.

Consumer spending may face more pressure if surging oil markets push prices higher at gasoline pumps. The threat to consumer outlays comes as a deepening housing downturn pressures household finances. Home foreclosures in the third quarter rose more than 30% from the second quarter to 446,700 properties nationwide, double the level of a year earlier, RealtyTrac Inc. said yesterday.

Separately, jobless claims edged lower last week, but a tick up in the trend suggests growth may remain sluggish. Initial claims for unemployment compensation fell 6,000 to a seasonally adjusted 327,000 last week, the Labor Department said. The four-week moving average for claims, an indication of the underlying strength of the job market, rose 1,750 to a six-month high of 327,000.





The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
A new approach to the Skills Gap; Community colleges may hold the key for manufacturing; 2017 Engineering Leaders Under 40
Doubling down on digital manufacturing; Data driving predictive maintenance; Electric motors and generators; Rewarding operational improvement
2017 Lubrication Guide; Software tools; Microgrids and energy strategies; Use robots effectively
The cloud, mobility, and remote operations; SCADA and contextual mobility; Custom UPS empowering a secure pipeline
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Power system design for high-performance buildings; mitigating arc flash hazards
Research team developing Tesla coil designs; Implementing wireless process sensing
Commissioning electrical systems; Designing emergency and standby generator systems; Paralleling switchgear generator systems

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Maintenance Manager; California Oils Corp.
Associate, Electrical Engineering; Wood Harbinger
Control Systems Engineer; Robert Bosch Corp.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me