Wednesday, February 17, 2010

Manufacturing At the Heart of V-Shaped Recovery

"The manufacturing sector is at the heart of the V-shaped economic recovery. After a weather-related dip in December, we said last month to expect a clear rebound in January and that’s exactly what we got, with manufacturing surging 0.9%. Auto production was particularly strong, spiking up 5%, but even excluding autos manufacturing was up 0.8%. Although another weather-related dip in February may be in the cards, we anticipate another quick rebound and continued strength in the year ahead.

The inventory-to sales ratio at businesses across the country has plummeted in the past year and may soon be at an all-time low. Meanwhile, inventories at car dealerships are already too low given the pace of sales and sales are likely to rise this year. That translates into continued increases in auto production. In other recent news, the Empire State Index, a measure of manufacturing in New York, jumped to 24.9 in February from 15.9 in January. In particular, the sub-index for employment was in positive territory for the fourth time in five months. As usual, better economic news will soon translate into a better job market."

~Brian Wesbury and Bob Stein


At 2/17/2010 5:37 PM, Blogger cliffwarren said...

I tend to agree... but I want to spout my "pet peeve" with articles like this. Automotive manufacturing spiked 5%? All well and good, but it spiked 5% from what? There is no mention of what the baseline measurement was. I *think* the baseline was the same month of the previous year. If it was, well, that happened to be a very bad month. Is 5% better than January 2009 good? Sure, it's better... but from V-shaped recovery perspective it might not be good at all. It might be only 5% better than the worst performance in decades.


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