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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (120093)	5/1/2008 10:27:49 PM
From: Giordano Bruno	Respond to of 306849

ISM Chief: More ‘Belt-Tightening’ Ahead The Institute for Supply Management’s index of manufacturing activity was unchanged in April, but continued to show a contraction for the sector overall. And it may not get much better in the months ahead. Businesses are taking hits from all sides: Consumers are pulling back, while input prices soar due to global factors. Norbert Ore, chair of the ISM’s manufacturing survey committee, said the environment reminds him of 2003 when businesses, facing uncertainty, began tightening their belts. (That caution was particularly clear leading up to the Iraq war.) “I see many of the same things happening this year,” he said in an interview. “It’s going to be one of consistent belt-tightening.” The ISM manufacturing index, based on a survey of purchasing managers, held at 48.6 for the month. Figures below 50 indicate that the sector is generally contracting. ISM readings above 41.4 suggest that the economy overall is expanding. On an annualized basis, the April reading corresponds to a 2.4% growth rate for the economy. The index for order backlogs grew after six months of decline, while exports continued their strength and customers’ inventories declined. The employment index worsened, dropping 3.8 points to 45.4, as manufacturers cut jobs or decided not to replace employees. And both new orders and production are slowly declining while prices are rising quickly. “What we’re seeing now is that the demand seems to be slowly deteriorating, and the prices are going in the opposite direction,” Mr. Ore said. “We’ve got a lot of volatility in the commodity markets.” Some industries — wood products, textiles, furniture, for instance, are “arguably in a depression” because of how long they’ve struggled, he said. The petroleum and chemicals sectors, of course, are not. “There’s probably six or seven industries that are holding up quite well, two or three that are marginal, and eight or so that are going to struggle for some time to come.” The economy has been in a “slow deceleration” for the last year with little outlook for improvement, Mr. Ore said. “I don’t see anything that will speed that up at this point,” he said. “The three sources of spending we look to are government, consumer and business. And all three of them are in very much of a holding pattern.” –Sudeep Reddy