U.S. Factory orders looking better, employment tough
By Joe Baker
By Joe Baker
Even though we are still seeing layoffs at local industries and may see still more, there may be a faint glimmer of light in the distance. An index of manufacturing activity released last week still shows decline, but new orders were moving up.
Mickey Levy, chief economist at the Bank of America, said: After a long bout of decline, things are starting to stabilize. But most analysts said they dont expect manufacturers to start hiring any time soon. They expect the unemployment rate to climb for the next several months.
The manufacturing sector lost one million jobs since the middle of 2000. Its collapse led the country into recession in March. It has been a shrinking segment of employment for several years but remains an important economic engine.
The report from the Institute for Supply Management said the Purchasing Managers Index reached 48.2 last month, up from 44.5 in November and 39.8 in October. Decembers level was the highest since October 2000. It suggests manufacturing still is declining, but more slowly.
The report conforms generally with other recent economic indicators. Several reports last week showed a gain in orders for non-military durable goods, coupled with a rise in consumer confidence and home sales.
Norbert Ore, chairman of the institutes manufacturing business survey committee, told the Los Angeles Times: The economy has proven to be quite resilient after the Sept. 11 event, and its pretty much back, in terms of the indexes, to the levels where we were prior to Sept. 11.
Ore added a note of caution, however. Some industries are showing signs of recovery, he said. We have to remember that as the economy starts to recover, it doesnt do it with every industry all at once.
The main cause for hope lay in the new orders portion of the index, an indicator that in December reached a level suggesting strong economic growth ahead. New orders dropped from 50.3 in September to 38.3 in October. Those orders came chiefly in high-tech industries, which led national and state economies into a downturn.
Evidence of a possible high-tech rise came from the Semiconductor Industry Association, which said global sales in November reached $10.6 billion, a hike of 1.6 percent since October. The association predicts sales this year will increase 6 percent to $150 billion, and by 2004 volume will top the record $200 billion in business set in 2000.
In the auto industry, strong sales sparked by 0 percent financing have depleted manufacturers inventories. But industry officials arent confident that sales will continue to be brisk enough to allow them to call back laid-off employees.
Fords director of sales analysis, George Pipas, said: I dont think anybody around here is declaring victory, because many of the indicators are still at levels that are below last year.