The first economic numbers since the Sept. 11 attack on America show manufacturing activity is still down.
Monday, the National Association of Purchasing Management reported manufacturing activity in the United States contracted for the 14th straight month in September.
Its index of business activity fell from 47.9 in August to 47.0, but was smaller than the drop of 45 that many analysts were expecting. A figure of above 50 indicates growth in manufacturing, while a reading below 50 shows contraction.
“The September performance doesn’t surprise me, really,” says American Trucking Associations Chief Economist Bob Costello. “The question is whether that downward trend will continue after one month, or will we go back to the prevailing trend prior to September, which was back up toward the growth point. I have a feeling we are going to be flat to down instead of going back up at least for a quarter or two," he said.
The number is important to trucking because the manufacturing sector is the trucking industry’s biggest customer, says Costello. He says the number is further evidence that the U.S. was already at or near recession levels before the attack.
Meanwhile, two other important indicators important to trucking’s future health were mixed, but it’s worth noting they are for the month of August.
Construction spending in the U.S. fell at its fastest pace in more than a year, according to the U.S. Commerce Department. Its drop of 1.1% was much steeper than a 0.3% drop analysts were expecting and is the largest falloff since July 2000, when it fell 1.3%. On the plus side, total construction spending is more than 5% higher than it was a year earlier.
While much of the talk about the future of the U.S. economy centers around the importance of consumer spending, it remained in positive territory for August. The Commerce Department reported an increase of 0.2%, but there is a fear that the increase may be short-lived.
Costello says a downturn in consumer spending would be bad for trucking and the overall economy.
“If the consumer is more concerned about the future, consumers could go into a bunker mentality and just sit tight and not spend a lot of money until they know what’s going on,” he says. “If that happens, we’re going to see a little deeper recession.”
There are reports that retail spending, which fell significantly following the attack, started to rebound last weekend
This morning attention turns to the Federal Reserve. They’re expected to announce another cut in interest rates to help the ailing economy, making for the ninth rate cut of the year.