The Federal Reserve’s “Beige Book” on economic conditions around the country described economic growth in most of its 12 districts as slow during June and July.
It found “manufacturing activity in nearly all sectors and regions declined further in recent months as producers adjusted to weak domestic and foreign demand and worked through accumulated inventories. Sustained weakness in the manufacturing sector spilled over to other businesses, with many districts indicating declines in demand for office space and trucking and shipping services.”
The report was not all bleak. It also found that a slower economy eased pressure to push wages up for business owners. However, the increased costs of employee benefits increased, due mainly to higher health insurance premiums. Prices for fuel, energy and other materials fell in many regions while manufacturers were making progress in running down their excess inventories.
The information will be used the central bank when it meets on August 21 to determine interest rates.
In the meantime the U.S. Commerce Department reported Wednesday U.S. wholesale inventories fell 0.2% in June, after increasing a revised 0.3% in May. That’s a good sign for trucking, since such a drop usually indicates business will have to move more of their products to market by truck to make up for what they have sold from their inventories. However, sales for the wholesale market during the same period fell 0.9%, the lowest level in 18 months, and follows a 0.5% drop in May.
The Commerce Department also reported another important indicator for trucking, the stock to sales ratio, a measure of how long it would take to totally deplete stocks at the current sales pace. The June number of 1.33 month’s worth compares to 1.32 in May, the highest ratio since February 1999, when it was reported at 1.34. This isn’t good for trucking, because the higher the number, the more inventory companies will have to sell before getting more products that need to be moved by truck.
To read the complete “Beige Book” report, go to www.federalreserve.gov/FOMC/BeigeBook/2001/20010808/default.htm.