Thread: Exports Not Making Up Falling U.S. Demand

Exports Not Making Up Falling U.S. Demand

MoneyNews
Tuesday, Jan. 15, 2008

Until recently, the housing decline seemed to be a phenomenon unto itself. Bad, yes, but ultimately containable.
Not anymore.

A key manufacturing recently index fell below 50 points – a key sign of a weakening economy.

The Institute for Supply Management index fell to 47.7. Although it had been declining through the second half of 2007, it had not dropped below 50.

The index has not been this low since April, 2003, just before the Dow began its bull-market climb out of the dot-com doldrums.


Falling even further was a leading ISM indicator forecasting future manufacturing business. Behind the fall was a decline in new factory orders, rather than excess inventory.

Despite that steady decline, manufacturing and export of aircraft, heavy equipment and other such goods had not seriously impacted by other areas of the faltering U.S. economy.

Among the numerous firms reporting a fall off in demand was Harley-Davidson, USG Corp., which makes wall board for construction applications, and Ariens Co., a manufacturer of lawn mowers, something every new homeowner needs.

"This is an early warning signal for manufacturing," Norbert Ore, chairman of the ISM Manufacturing Business Survey Committee told the Wall Street Journal in a statement recently.

"Industries close to the housing market appear to be struggling more than others, and those involved in exports seem to be doing better," Ore said.

Stocks responded quickly and emphatically to the negative news, dropping steeply as bearish sentiment climbed among many analysts.

Prior to the report on December factory production, many analysts cited still-healthy U.S. manufacturing and exports as a firewall against the housing and credit virus affecting the wider economy. After all, companies still had cash.

Helped by a dollar declining against foreign currencies, the export business was humming along nicely, then the housing, mortgage and credit problems all seemed to hit at once.

In the early weeks of the current multi-factored economic slowdown, manufacturing and exports remained strong, a counterweight to the worsening crisis.

But gloomy factory production numbers have changed the picture, and analysts across the board are rethinking their short- and mid-term predictions while bracing for more bad news as the economic crisis ripples out in every direction.

Meanwhile, as recession clouds gather, many businesses have put their expansion plans and new purchases on hold, and more such pullbacks are expected to come.

Still, some experts warn against drawing conclusions prematurely.

Adam York, an economist for Wachovia, told CNN Money. com, that, "One month doesn't a trend make. We've touched those levels [before] without it indicating a recession was coming."

All eyes are now on the Fed, awaiting its next move in the wake of the ISM numbers and the ever-spiraling economy. The rate-setting committee of the bank meets on Jan. 29.

http://moneynews.newsmax.com/money/arch ... 143742.cfm

I personally have seen the ecomony weakening for almost 18 months...
I work in Trucking and have seen load capacity steadily declining for months. Every month freight capacity has slowed!

Basically "Trucking" is the "Canary in the Coal Mine". Slow orders, lead to less loads to haul, leads to drivers getting laid off or getting less miles, not to mention the "Mexican" trucks not coming in and competing for jobs.