US manufacturing shows signs of recovery
In its report for August, the National Association of Purchasing Management (NAPM) stated that manufacturing declined for the 13th consecutive month during the month.
However, it also said the rate of decline was markedly slower than it had been in previous months. This was evidenced by the association’s index of business activity which climbed to 47.9 from the 43.6 recorded in July – a big improvement on the 44.0 that economists had been predicting. There was even some good news directly related to the leather industry. It was one of seven out of a total of 20 industries tracked by the association to report growth during the month.
Said Norbert J. Ore, chairman of the NAPM's Manufacturing Business Survey Committee: "The manufacturing sector continued to decline in August as has been the trend since August 2000. However, the rate of decline decelerated significantly during the month.
"Both production and new orders made marked improvement and recorded impressive growth after a lengthy period of decline providing encouragement that a number of industries are starting to recover," Ore said.
The same positive outlook was echoed by the National Association of Manufacturers (NAM), whose ‘Annual Labor Day Report on the State of the American Work Force’ predicted that employment in the sector will start to stabilise by the end of the year and continue to improve throughout 2002. The association based its prediction on the combined effects of across the board tax cuts and successive interest rate cuts, which it said will result in increased consumer spending and investment.
"The current manufacturing recession that began in the latter half of 2000 is chiefly due to the combined effects of excessively high interest rates, high energy prices, the over-valued dollar and increased regulatory and legal costs," said NAM President Jerry Jasinowski. "The recent data has been somewhat favourable and suggests that we are nearing a turning point. Inventories have been drawn down, industrial production has stabilised and consumer spending remains strong. Factors encouraging economic growth.
"The long-term outlook for manufacturing is more encouraging. We have the best workers and technology in the world, and the factors that drove the productivity boom of the late 1990s are still in place. The rate of technological advance remains higher in the United States than in any other country, so productivity growth will likely return to nearly 3 percent by 2002, which translates into continued real income increases for working Americans," Jasinowski concluded.
