US manufacturing output expands for second consecutive month
Last Friday’s Federal Reserve report that manufacturing output rose by 0.3 percent in February is compelling evidence that a recovery is underway, said Jerry Jasinowski, president of the National Association of Manufacturers.
"At last, manufacturing is back in the black," said Jasinowski. "After falling 7.5 percent over the previous 15 months, Friday’s report shows that manufacturing output grew by 0.3 percent both in February and in January based on revised estimates.
"Registering the fastest monthly increases since July 2000, American industry is finally beginning to pull out of the worst downturn in two decades," Jasinowski said. "Strong gains were made in durable goods manufacturing which rose by 0.4 percent for the second month in a row. While industrial equipment output receded from the strong gain the previous month, impressive gains were made from most of the durable industries with the exception of aerospace, which has been hard hit since September 11.
"Inventories have been largely worked off, energy prices have moderated, the prime rate is at its lowest level in 30 years and last week the economic stimulus package was signed into law," Jasinowski said. "The ingredients for a rebound are largely in place. However, the international scene, where growth is expected to be weak in 2002 and the overvalued dollar continues to hinder exports, will likely make the 2002 manufacturing turnaround more moderate than the initial stages of past recoveries."
Elsewhere, the US Bureau of Labor Statistics has reported that producer prices rose 0.2 percent last month. "However, much of this acceleration was due to the volatile food component, which rose by 1 percent last month," Jasinowski said. "Excluding food and energy, the core PPI was as flat as a pancake and showed no change. This highlights the fact that manufacturers continue to have no pricing power and must strive to cut costs and improve efficiencies and productivity to regain profitability in 2002 from the sharp drop in profits that occurred during the manufacturing recession of 2001."
