US NAPM'S ORE: SEES STRONG 2H; NOT WORRIED ABOUT PRICES
NEW YORK (MktNews) - The U.S. manufacturing sector is likely to post a strong second half benefitting from low inventories, ample production capacity and strong consumer demand, according to Norbert Ore of the National Association of Purchasing Managers.
"I see a very strong second half," Ore said, pointing to a favorable balance of forces in the sector where the inventories index remains low, having held in the low 40s through much of the year, and available capacity remains high.
Ore expects a blizzard of millennium promotions to bolster consumer buying sharply in the second half, especially in the U.S. where he said interest is especially high. In fact, Ore worries that the 2000 craze will overfeed manufacturing production, leading to a buildup of inventories and a slowdown in first-quarter 2000.
Ore played down the drop in the July report, where the overall index dipped to 53.4 from 57.8 in June. He said an occasional dip is usual in an uptrend, which has seen the index inch higher through most of the year.
"Manufacturing has enjoyed six months of recovery. We're on solid footing -- not overheated," he said.
Prices remain a bright spot in the sector as upward movement in commodities appears to be ebbing, Orr said. Downplaying an uptick in prices paid to 54.7 from 53.5 in June, Ore said the impact from the Spring oil spike has probably worked its way through the manufacturing pipeline. Other factors, especially wage pressures, remain positive.
"This is a real positive report, especially regarding inflation," he said.
Among other positives, Ore pointed to the beginnings of a solid recovery in the textile industry, which he said suffered through a "depression" in 1998. |
