Manufacturing Barometer Hits 19-Year
Low
March 30, 2001
A key gauge of manufacturing activity in the
Chicago region sank to its lowest level in 19
years this month.
In another strong indication that the
manufacturing sector remains mired in a
recession, the Purchasing Management
Association of Chicago index of area business
activity dropped to 35.0 in March on a
seasonally adjusted basis -- its lowest level
since April 1982. The February reading was
43.2.
A reading above 50 indicates expansion in the
manufacturing sector and a reading below 50
indicates a contraction.
All other indexes in the Chicago group's report
also dropped last month.
The order backlog index fell in March to 30.2,
the lowest since 1982, the Chicago purchasers
said. In February the index was 40.1.
The prices paid index, a key inflation
component in the Chicago purchasing
managers' report, fell to 59.6 in March from
64.9 in February.
The supplier deliveries index fell to 40.2 from
47.0 in February.
The employment index fell to 32.3 from 42.2 in
February.
The new orders index fell to 35.1 in March from
43.0 in February.
The Chicago survey is watched closely for clues to the index of the National
Association of Purchasing Management. The NAPM March survey is scheduled to
be released Monday, April 1, at 10 a.m. EDT.
The Chicago index is based on a survey of purchasing managers in northern
Illinois and northwestern Indiana, one of the largest industrial areas in the U.S.
Consumer Sentiment Rose From February
The University of Michigan's consumer-sentiment index came in at 91.5 for March,
according to subscribers who have seen the report. The figure was down slightly
from a preliminary reading of 91.8 at midmonth, but above February's 90.6 level.
The report was released to subscribers Friday.
The index of current conditions dropped to 103.4 from 104.1 in the preliminary
report. The February level was 105.8.
But the university's index of consumer expectations showed a big bounce to 83.9
from February's 80.8. Friday's reading was a slightly downward adjustment from
March's midmonth reading of 84.
Consumers so far have been more resilient than businesses in reaction to the
economic slowdown, even though most personal portfolios have been decimated
by the stock market's downturn.
"You have puzzling strength in consumption despite the fact that the factory and
technology sector have been pummeled," said Mike Englund, chief market
economist for Standard & Poor's MMS. "The consumer seems to be hanging in
there ... the apparent effect of wealth on consumption seems to be limited."
That could be key to keeping the economy afloat, since consumer spending
accounts for the bulk of economic activity.
Personal Income Edged up 0.4%, Outpacing Spending in February
Income and spending moderated in February, though consumers still were willing
to spend on big-ticket items.
Personal income edged up 0.4% in February while personal consumption
expenditures rose 0.3%, the Commerce Department reported Friday.
Spending matched the expectations of economists surveyed by Thomson Global
Markets, but the income figure was a tad higher than the 0.3% predicted.
January income was revised to a gain of 0.5% from the 0.6% pace previously
estimated, and consumer spending was revised to a gain of 1% from 0.7%.
Spending on durable goods, or high-priced items meant to last three or more
years, rose 1.6% during February. Spending on nondurable goods items fell 0.5%.
Even though consumer's incomes rose slightly faster than spending in February,
the personal-savings rate remained at a record negative 1.3%. The negative
savings rate suggests consumers are continuing to borrow or liquidate assets to
maintain spending levels. The savings rate doesn't account for gains in retirement
plan assets or wealth tied up in people's homes.
The report showed no acceleration in inflation pressures in February as the price
index for personal consumption expenditures advanced 0.1%...........................http://www.siliconinvestor.com/readmsg.aspx?msgid=15596792 |
