|JB BROWN, BCI PRESIDENT, QUOTED IN WSJ ARTICLE “NEW ORDERS, EXPORTS BOOSTS MANUFACTURING”
November 2, 2010
JB Brown, BCI President, Quoted in WSJ Article “New Orders, Exports Boosts Manufacturing”
By SARA MURRAY
U.S. manufacturing picked up steam last month, aided by rising exports and a surge in new orders that suggests the factory sector will continue to bolster growth through the rest of this year.
The Institute for Supply Management’s index of overall manufacturing activity, based on surveys of purchasing managers, rose to 56.9 in October from 54.4 the month before. Any number over 50 points to expansion.
The latest reading marks the 15th month in a row the index has pointed toward growth and comes as the Federal Reserve is poised to announce this week a new round of bond-buying to lower long-term interest rates in the hopes of speeding growth in the broader economy.
Another report released Monday showed consumer spending rose only slightly ahead of the holiday season. Personal incomes declined, as payrolls fell for government workers and those at goods-producing companies.
The manufacturing report showed production ramping up in a wide range of industries, including machinery and apparel. A subindex in the report that tracks exports climbed to 60.5 last month from 54.5 in September, partly helped by the weak U.S. dollar. Imports declined by five points to 51.5. The employment index ticked up.
Demand is booming at Bremen Castings Inc., a foundry and machining company in Bremen, Ind. Sales are up 49% so far this year and the manufacturer has been adding employees, said James L. Brown, the company’s president. Bremen also has spent some $4.2 million this year to beef up facilities and equipment. “You’ve got the cash and you’ve got the bank behind you,” said Mr. Brown, “why not?”
Still, Mr. Brown is trying to balance aggressive moves with caution because it isn’t clear how long the demand spree will last, he said. “We’re booked up until Christmas, and I’m really not looking much further out than that,” he said. In past years, employees took the week of Christmas off, but they will take just the holiday off this year to keep up with demand.
Price pressures popped up in raw materials last month, and some companies with heavy ties to commodities are feeling the pinch.Cooper Tire & Rubber Co. said Monday that its earnings fell despite stronger demand because of rising raw-material costs. The Findlay, Ohio, company’s third quarter earnings fell 4.8% even as sales were up 10% from the same time a year earlier.
For demand to continue rising, the economy needs to add jobs so Americans can keep spending. Consumer spending rose just 0.2% in September, the Commerce Department said Monday.
The lackluster spending is tied to tight budgets. With the unemployment rate at 9.6% and high joblessness expected for a while Americans are uneasy. And many families are increasingly reliant on government benefits to get by. Waning support from emergency unemployment insurance pulled personal incomes down by 0.1% in September. Contributions from jobless benefits fell by $25.5 billion at an annual rate following a $20.5 billion boost in August.
“It was a little disappointing,” John Ryding, an RDQ Economics analyst said of the report. “It really speaks to the need to get jobs going to start putting more income into household pockets.”
As consumers earned less and spent more, the savings rate declined to 5.3% in September from 5.6% a month earlier.
A gauge of inflation in the spending report showed little threat of price increases in the overall economy. The core price index for personal consumption expenditures, which strips out volatile food and energy prices and is watched closely by the Fed, was flat in September and was up just 1.2% for the year.
A separate report Monday showed construction spending increased 0.5% in September to a seasonally adjusted annual rate of $801.7 billion. The gain was largely from public construction, which rose, as private construction remained flat. Spending is still 10.4% below its level from the same time last year.
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