U.S. Electronics Output Up
By James Haughey, Director of Economics, Reed Business Information -- Electronic News, 12/19/2003
The Federal Reserve Board reported that manufacturing surged 0.9 percent in November, led by a 6.1 percent jump in semiconductor and electronic output.
At this pace chip output would double in a year. Manufacturers of computers, storage devices and peripherals raised November output 2.6 percent. The gain for semiconductors and computers includes more parts, as well as more content, function or speed per part. Telecom manufacturers increased production 1.0 percent from October, mostly more parts rather than more content per part.
Electronics end markets also picked up strongly last month. Industrial machinery production soared 2.5 percent after no net change over the previous year. Motor vehicle output slipped 0.3 percent, but that appears to be temporary because dealers' sales recently have revived with aggressive discounting. Overall, durable goods manufacturing increased 1.4 percent in November and has surged at a 16 percent annual pace in the last three months.
Separately, the Labor Department reported that the consumer price index, excluding food and energy, declined 0.1 percent last month. The underlying inflation rate has dipped to about 1 percent. This is the flip side of recent huge labor productivity gains. This assures that cheap credit will last well into 2004, keeping both consumption and investment spending growing much stronger than average.
Also, the Census Bureau reported that housing starts soared to a 2.07 million annual rate in November, about 20 percent higher than expected. Although this may be the peak of the housing cycle, it assures that the huge construction sector will be growing strongly at least through the winter.
Forget all of the economic and market outlooks you saw in the last few months. They have been outdated by the flurry of astonishingly strong economic reports over the last month. A few months ago the consensus GDP forecast for the US in 2004 was 3 percent to 3.5 percent growth. Now it is pushing 5 percent. Market forecasts need to be adjusted accordingly. |
