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PPI up 4.1% from January 2011
New Orders for Durable Goods up 3% in Dec. 2011
Purchasing Managers Index up 1% in January
Freight Rates on the Rise
U.S. Industrial Outlook: Growth to Outperform Overall GDP Growth
Orders, Production, Employment Up
Durable Goods Orders Fell 0.7 Percent In October
PPI up 4.1% from January 2011
From the U.S. Bureau of Labor Statistics, February 16, 2012
The Producer Price Index for finished goods advanced 0.1 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Prices for finished goods declined 0.1 percent in December and moved up 0.2 percent in November. At the earlier stages of processing, the index for intermediate goods fell 0.4 percent in January, and crude goods prices increased 1.5 percent. On an unadjusted basis, the finished goods index advanced 4.1 percent for the 12 months ended January 2012, the smallest year-over-year rise since a 3.6-percent increase in January 2011.
Stage-of-Processing Analysis
Finished goods
In January, the rise in finished goods prices can be attributed to the index for finished goods less foods and energy, which moved up 0.4 percent. By contrast, prices for finished energy goods and for finished consumer foods declined 0.5 percent and 0.3 percent, respectively.
Finished core: The index for finished goods less foods and energy moved up 0.4 percent in January, the largest increase since a 0.5-percent rise in July 2011. In January, about forty percent of the finished core advance can be attributed to prices for pharmaceutical preparations, which climbed 2.0 percent. Higher prices for light motor trucks and household appliances also were factors in the increase in the finished core index. (See table 2.)
Finished energy: The index for finished energy goods fell 0.5 percent in January, the fourth straight monthly decrease. Leading the January decline, prices for residential electric power moved down 1.7 percent. Falling prices for residential natural gas also contributed to the decrease in the index for finished energy goods.
Finished foods: Prices for finished consumer foods moved down 0.3 percent in January after falling 0.9 percent in December. Over eighty percent of the January decline can be attributed to the index for fresh and dry vegetables, which fell 8.8 percent.
Intermediate goods
The Producer Price Index for intermediate materials, supplies, and components moved down 0.4 percent in January following a 0.2-percent decline in December. Over three-fourths of the broad-based decrease in January is attributable to prices for intermediate energy goods, which fell 1.4 percent. Also contributing to the decline in intermediate goods prices, the index for intermediate goods less foods and energy inched down 0.1 percent, and prices for intermediate foods and feeds decreased 0.4 percent. For the 12 months ended in January, the intermediate goods index rose 4.2 percent, the smallest year-over-year advance since a 2.9-percent increase in December 2009. (See table B.)
Intermediate energy: Prices for intermediate energy goods fell 1.4 percent in January after two consecutive increases. The index for utility natural gas, which dropped 2.7 percent, was a major contributor to this decrease. Lower prices for commercial electric power and residual fuel also were factors in the decline in the intermediate energy goods index. (See table 2.)
Intermediate core: Prices for intermediate goods less foods and energy edged down 0.1 percent in January, the fourth consecutive decline. Leading the January decrease was the index for basic organic chemicals, which fell 4.4 percent. Lower prices for cold rolled steel sheet and strip also contributed to the decline in the intermediate core index.
Intermediate foods: The index for intermediate foods and feeds fell 0.4 percent in January following a 0.8-percent decrease in December. A 5.4-percent drop in prices for natural cheese (except cottage cheese) accounted for most of the January decline in the intermediate foods and feeds index.
Crude goods
The Producer Price Index for crude materials for further processing moved up 1.5 percent in January. For the 3-month period ending in January, crude material prices rose 2.6 percent following a 1.1-percent decline from July to October. In January, nearly half of the broad-based monthly advance is attributable to a 1.6-percent increase in prices for crude energy materials. Also contributing to the January advance, the index for crude foodstuffs and feedstuffs moved up 1.6 percent, and prices for crude nonfood materials less energy rose 0.6 percent. (See table B.)
Crude energy: The index for crude energy materials increased 1.6 percent in January. For the 3-month period ending in January, prices for crude energy materials climbed 7.5 percent subsequent to a 2.2- percent decline for the 3 months ended October 2011. A 5.7-percent jump in the index for crude petroleum was responsible for the January monthly advance in crude energy prices.
Crude foods: The index for crude foodstuffs and feedstuffs increased 1.6 percent in January. From October to January, prices for crude foodstuffs and feedstuffs edged down 0.2 percent after rising 0.9 percent in the 3 months ended October 2011. Almost sixty percent of the monthly advance in January can be traced to a 6.4-percent increase in the corn index. Higher prices for slaughter steers and heifers and for soybeans also were factors in the rise in the crude foodstuffs and feedstuffs index.
Crude core: The index for crude nonfood materials less energy moved up 0.6 percent in January. For the 3 months ending in January, crude core prices fell 1.7 percent subsequent to a 2.9-percent decline from July to October. The January monthly rise was led by a 3.3-percent increase in the index for carbon steel scrap. Higher prices for corn also contributed to the advance in the crude core index.
New Orders for Durable Goods up 3% in Dec. 2011
Reprinted from U.S. Census Bureau
New orders for manufactured goods in December, up two consecutive months, increased $5.3 billion or 1.1 percent to $466.2 billion, the U.S. Census Bureau reported today. This followed a 2.2 percent November increase. Excluding transportation, new orders increased 0.6 percent.
Shipments, up seven consecutive months, increased $3.4 billion or 0.7 percent to $459.4 billion. This followed a 0.2 percent November increase.
Unfilled orders, up twenty of the last twenty one months, increased $12.7 billion or 1.4 percent to $911.5 billion. This followed a 1.3 percent November increase. The unfilled orders-to-shipments ratio was 6.00, down from 6.13 in November.
Inventories, up twenty six of the last twenty seven months, increased $0.4 billion or 0.1 percent to $610.1 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.4 percent November increase. The inventories-to-shipments ratio was 1.33, down from 1.34 in November.
New Orders
New orders for manufactured durable goods in December, up five of the last six months, increased $6.3 billion or 3.0 percent to $214.3 billion, unchanged from the previously published increase. This followed a 4.2 percent November increase.
Transportation equipment, up two consecutive months, had the largest increase, $3.0 billion or 5.4 percent to $58.3 billion.
New orders for manufactured nondurable goods decreased $1.0 billion or 0.4 percent to $251.9 billion.
Purchasing Managers Index up 1% in January
Reprinted from Institute for Supply Management
Economic activity in the manufacturing sector expanded in January for the 30th consecutive month, and the overall economy grew for the 32nd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®
The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 54.1 percent, an increase of 1 percentage point from December's seasonally adjusted reading of 53.1 percent, indicating expansion in the manufacturing sector for the 30th consecutive month. The New Orders Index increased 2.8 percentage points from December's seasonally adjusted reading to 57.6 percent, reflecting the 33rd consecutive month of growth in new orders. Prices of raw materials increased for the first time in the last four months. Manufacturing is starting out the year on a positive note, with new orders, production and employment all growing in January."
Performance by Industry
Of the 18 manufacturing industries, nine are reporting growth in January, in the following order: Apparel, Leather & Allied Products; Petroleum & Coal Products; Machinery; Computer & Electronic Products; Transportation Equipment; Miscellaneous Manufacturing; Fabricated Metal Products; Paper Products; and Primary Metals. The seven industries reporting contraction in January — listed in order — are: Plastics & Rubber Products; Furniture & Related Products; Wood Products; Chemical Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; and Textile Mills.
Freight Rates on the Rise
Reprinted from Supply Chain Digest
Public Rail Carriers Show Profit Growth Well Above Changes in Volumes; LTL Carriers are Slowly Turning the Financial Ship Around On Rate Increases, Business Discipline
As always, we enjoyed reviewing the quarterly "State of the Freight" report from the transportation industry analysts at Wolfe Trahan. Though the survey of several hundred shippers is meant to support the needs of investors in the transportation sector, always there is some great insight and data of use to logistics professional as well.
Included in the report was the firm's own analysis of pricing trends across several modes. It found that truckload pricing across a group of six large TL carriers was up an average of 3.6% in Q3 versus a year ago, and 1.6% versus Q2. Rates on a year-over-year basis had been up between 4.7-5.3% over the previous four quarters, and were up sequentially 2.6% in Q2 after dipping 1.1% sequentially in Q1.
The story was even stronger in the LTL sector, which saw average rates increases of 6.9% in Q3 year-over-year, and 3.4% versus Q2. LTL Rates had been dropping sharply on a year-over-year basis from at least Q1 2010 and most likely before that until the sector ended the slide in Q2 of this year, when rates also rose by a strong 5.1% over 2011. (These numbers are all net of fuel surcharges.)
Interestingly, that 6.9% growth in rates in the LTL sector exactly matched the level of the general rate increase many LTL carriers announced in August and September, meaning those price hikes appear to have been realized in the market.
The report notes that LTL carriers such as Con-Way and FedEx Freight have culled much unprofitable customers and freight from their networks in recent quarters.
Shippers, however, have relatively modest expectations for rate increases in 2012, the survey found.
On average, shippers expect truckload rates to rise 2.6% in 2012, down a bit from the expectations for a 3% rise in the Q2 survey. The expectations for LTL are for an average 2.1% rise next year, again down a bit from the predictions for a 2.5% rise in the previous quarter's survey.
U.S. Industrial Outlook: Growth to Outperform Overall GDP Growth
Reprinted from Modern Distribution Management
U.S. manufacturing industrial production rebounded in the third quarter of 2011, growing by 4 percent, and is extending into the final months of the year, according to the Manufacturers Alliance for Productivity and Innovation (MAPI) U.S. Industrial Outlook, a quarterly report that analyzes 27 major industries.
"The growth is being led by the energy, transportation, and industrial equipment industries," said Daniel J. Meckstroth, Ph.D., MAPI chief economist and author of the analysis. "We believe the continuing pickup in domestic auto production will also be a major driver of overall economic growth next year."
"We project that the pace of manufacturing growth will outperform overall GDP growth. Pent-up demand for postponed consumer durable goods continues to exist, particularly in motor vehicles," he added. "In addition, firms are profitable and have the need to spend more for both traditional and high-tech business equipment, and reasonably strong growth in emerging economies is still driving U.S. exports."
The report offers economic forecasts for 24 of the 27 industries. MAPI anticipates that 18 of the 24 industries will show gains in 2012, led by housing starts with 20 percent growth, albeit from severely depressed levels in 2011. Three industries will remain flat, and three will decline, including public construction the most, by 6 percent. Broad-based advances should occur in 2013 with growth likely in 23 of 24 industries, again led by housing starts at 32 percent. Public works construction is the lone industry expected to decline in 2013, by 2 percent.
Orders, Production, Employment Up
Reprinted from Institute for Supply Management -- December 1, 2011
Economic activity in the manufacturing sector expanded in November for the 28th consecutive month, and the overall economy grew for the 30th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.
The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 52.7 percent, an increase of 1.9 percentage points from October's reading of 50.8 percent, indicating expansion in the manufacturing sector for the 28th consecutive month. The New Orders Index increased 4.3 percentage points from October to 56.7 percent, reflecting the second month of growth after three months of contraction. While the Prices Index, at 45 percent, increased 4 percentage points from the October reading of 41 percent, prices of raw materials continued to decrease (registering below 50 percent) for the second consecutive month. Respondents cite continuing concerns about the general economic environment, government regulations and European financial conditions, but are cautiously more optimistic about the next few months based on lower raw materials pricing and favorable levels of new orders."
Performance by Industry
Of the 18 manufacturing industries, eight are reporting growth in November, in the following order: Wood Products; Textile Mills; Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; Computer & Electronic Products; Apparel, Leather & Allied Products; and Paper Products. The nine industries reporting contraction in November — listed in order — are: Miscellaneous Manufacturing; Nonmetallic Mineral Products; Plastics & Rubber Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Chemical Products; Fabricated Metal Products; Transportation Equipment; and Machinery.
Durable Goods Orders Fell 0.7 Percent in October
Reprinted from Industrial Distribution -- November 23, 2011
U.S. business orders for long-lasting manufactured goods fell for a second straight month in October. While much of the weakness came from a big drop in demand for commercial aircraft, a key category that tracks business investment spending fell by the largest amount since January.
The Commerce Department reported Wednesday that orders for durable goods fell 0.7 percent following a September decline of 1.5 percent. Orders for core capital goods, considered a good proxy for business investment spending, dropped 1.8 percent, the biggest decline since a 4.8 percent fall in January.
Manufacturing has been one of the strongest sectors in the economy in this sub-par recovery, but this sector slowed this year as consumer demand faltered and auto factories had trouble getting parts following the March natural disasters in Japan.
The October drop in core capital goods, non-defense products excluding aircraft, was expected to be a temporary setback. This category has been surging this year, spurred by tax breaks that are allowing companies to write-off their investments all in one year as long as the purchases are made before the end of 2011. That has provoked a rush by companies to take advantage of this tax break which Congress passed in an effort to spur the sluggish economy.
For October, orders for transportation products fell 4.8 percent, reflecting a 16.4 percent drop in demand for commercial planes. Orders for autos showed a solid 6.2 percent increase, reflecting solid sales gains in recent months.
Excluding transportation, durable goods orders posted a 0.7 percent increase. This gain reflected increases in such areas as primary metals such as steel and heavy machinery.
The Institute for Supply Management's manufacturing index grew more slowly in October than September but still remained at a level indicating manufacturing is continuing to expand. Manufacturing, one of the first sectors to start growing after the recession officially ended in June 2009, has posted growth for 27 consecutive months, according to the ISM index.
The overall economy grew at a 2 percent rate in the July-September quarter, the Commerce Department said Tuesday, revising down its initial estimate of 2.5 percent growth. That was still a better performance than the 0.9 percent growth during the first six months of this year, the slowest activity in two years.
The revision in growth reflected even a bigger drop in inventories that initially estimated.
Analysts said that should set the stage for better growth of around 3 percent in the current October-November quarter as companies work to restock depleted shelves. Businesses had been caught by surprise by the stronger demand in the summer and that led to a reduction in their stockpiles.
U.S. automakers reported stronger sales in October, which should give a boost to manufacturing in future months. Sales are now back to the same pace as before the March earthquake in Japan, which had disrupted supplies and left many U.S. dealers with a shortage of popular Japanese models.
The Federal Reserve reported last week that factory production increased by a solid 0.5 percent in October, the fourth straight monthly gain. Overall industrial production, which includes output at utilities and the mining sector, was up 0.7 percent and has risen by 13.4 percent from its recession trough in June 2009. It remains 5.3 percent below its pre-recession peak reached in September 2007.
Factory activity slowed in the spring, reflecting the Japanese supply disruptions and a big spike in energy and food prices, which cut into consumer demand for other items. But in recent months, there have been signs of improving consumer and business demand.
