Manufacturing, Spending, Construction Numbers Show Promise
July 02, 2001
Monday's June report from the National Association of Purchasing managers showed the manufacturing sector at its strongest in seven months.
The overall activity index rose from 42.1 to 44.7, while the orders sub-index increased from 45.5 to 48.6 - just short of signaling a production pickup early in the summer. The mid 40's value means that a few industries are now increasing production, but that most are still cutting, although less severely than earlier.
The two weakest factory sectors are electronic components and communications equipment. Neither is a significant source of truck freight. A "freight weighted" index would likely be several point higher than 44.7. With freight also being generated moving inventory to final consumption points, freight volume is very close to stable.
The $40 billion July-September tax rebates should induce enough added consumption to get freight volume growing, if only very slowly, over the summer.
Separately, both consumer spending and construction spending continued to expand in May, according to the Department of Commerce. Consumption spending grew 0.5% and construction spending rose 0.3%, mostly due to a pickup in housing construction.