Subscribe to our free, weekly email newsletter!



Say hello to the manufacturing-led recovery

By Jeff Berman, Group News Editor
October 04, 2010

Ok—I guess it is not a surprise at this point, but it looks like any type of economic recovery occurring (it is, right?) is being driven by manufacturing rather than the more typical leader, consumer spending.

How do I know this is true? For one thing, I was in Target not that long ago to buy some plastic golf balls to destroy my yard with, and I felt like I was literally the only person there. It was really a little weird.

But the real reason I know this that various data points indicate that is truly the case. One of the most recent indicators is last week’s Institute of Supply Management Manufacturing release and its PMI reading of 54.4 percent.

While this was down from August’s 56.3 percent PMI by 1.9 percent, any reading that is 50 or better represents economic growth. September represents the 14th consecutive month that the PMI is more than 50, coupled with the overall economy on a growth track for 17 straight months.

Meanwhile, consumer spending remains stalled as evidenced by a weaker-than-expected Back-to-School season, leading up to what could be a timid Holiday Shopping season as well. Not encouraging, I know, but it is what we are looking at for now.

Another notion supporting the thesis for a manufacturing-led recovery is recent data from freight transportation consultancy FTR Associates. FTR’s August Trucking Conditions Index, which is comprised of factors affecting trucking companies, showed a 2.3 percent gain for the sixth straight month of growth and indicates a healthy environment for trucking.

FTR also said that strong manufacturing increases have generated freight growth above GDP.

And FTR President Eric Starks said in a statement that “conditions for trucking are positive in spite of sluggish growth in the overall economy because manufacturing, which generates freight, is growing much more rapidly than services.”

With unemployment high and consumers still wary of spending at previous levels, it looks like the manufacturing-led recovery could be here to stay, it seems. What is your take?

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Intermodal units, at 278,767 containers and trailers were up 6.7 percent compared to the same week last year and marks the third best week for intermodal ever recorded based on AAR’s data.

LM Group News Editor Jeff Berman recently conducted a wide-ranging interview with Bobby Harris, President and CEO of non asset-based 3PL BlueGrace Logistics about various aspects of the freight transportation market.

It’s small, but senior brass at YRC Worldwide will take it. After nearly seven years of continuing losses in excess of $2.6 billion, the parent of the nation’s second-largest LTL carrier posted a narrow net profit in the third quarter ended Sept. 30.

As was the case for the second quarter, third quarter earnings results for publicly-traded less-than-truckload (LTL) carriers are again strong. Signs of solid earnings results from carriers that have posted earnings to date include tonnage increases, gains in weight per shipment and average daily shipments, higher yield, and revenue per hundredweight.

While the holiday season is known to bring good tidings and cheer to all, it may also come with another thing that is not so pleasant: higher rate freights. That was the thesis of a commentary written by Mark Montague, industry pricing analyst and chief market-watcher for DAT, a Portland, Ore.-based subsidiary of TransCore.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA