Latest Commerce report reflects uncertainty in U.S. manufacturing sector
October 05, 2010 - SCMR Editorial
After growing faster than the overall economy during the first year of the recovery, manufacturing has clearly downshifted into low gear, noted spokesmen for the National Association of Manufacturers (NAM).
According to the latest U.S. Department of Commerce report, new orders for manufactured goods edged down 0.5 percent in August.
“Today’s report marks the second decline in factory orders in the past three months,” said NAM. “Much of the overall August decline was due to a 40.2 percent plunge in volatile non-defense aircraft orders, which tend to fluctuate from month-to-month.”
Josh Green, CEO of Panjiva, an online search engine with detailed information on global suppliers and manufacturers, told SCMR that “the jobless recovery” is partly to blame.
“While we feel that the manufacturing sector is on a positive trajectory, it’s hard to explain that to people out of work,” he said.
Orders in the rest of manufacturing actually rose 0.4 percent in August, due chiefly to rebounds in machinery, computers and electronic products. But even with these increases, orders in these areas have slowed considerably from earlier in 2010, signaling that business investment will not likely continue to be the catalyst for economic growth as it was in the second quarter of the year.
Continued declines in new orders for construction materials and supplies and consumer goods show that housing and consumer spending have similarly weakened now that much of the temporary boost from several fiscal stimulus measures has ended.
According to NAM, the weak status of the labor market and increased uncertainty – stemming from possible federal tax and regulatory changes that are looming – will likely weigh down the recovery.
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