• Economic trends stuck in neutral, say experts

    A mix of positive and negative metrics indicates the U.S. economy remains largely stuck in neutral, according to a variety of reports. Yet that neutrality isn’t necessarily a bad thing, said experts
    Dec. 1, 2011
    3 min read

    A mix of positive and negative metrics indicates the U.S. economy remains largely stuck in neutral, according to a variety of reports. Yet that neutrality isn’t necessarily a bad thing, said experts.

    For example, the Credit Managers’ Index (CMI) compiled by the National Assn. of Credit Management (NACM) remained largely unchanged for the third consecutive month, dropping slightly to 53.5 in November from 53.7 in October.

    While not ordinarily great news, given September’s strong data, it is not altogether a bad thing that October and November stayed much the same, noted Chris Kuehl, NACM’s economist.

    Retail numbers are coming in far more robust than anybody anticipated, he added, with Black Friday sales totals almost 7% above last year, with records set in terms of dollar expenditures and subsequent Cyber Monday sales just as dramatic.

    There is also evidence that manufacturers are setting up to do far more capital spending than in past years, Kuehl said – a view echoed by a recent survey conducted by global consulting firm KPMG LLC.

    According to KPMG’s latest Global Business Outlook survey, U.S. manufacturing executives plan to use what they perceive as a “pause” in the economic growth cycle to prepare for the future, expressing a firmer commitment to spending on capital improvements and manufacturing research and development in 2012.

    While U.S. manufacturing executives polled by KPMG expecting higher R&D investment slipped slightly to 18% from 20% in June and 29% in February, the number who expected the steady levels of research rose to 68%, from 57% in June and 53% in February.

    Also, more than 60% of those U.S. manufacturing executives polled expect continued levels of capital spending in the coming 12 months, compared with 56% in June and 51% in February. Those who expected higher spending dropped only slightly to 19% in October, compared with 22% in June and a much stronger 31% in February.

    Yet these same executives, who in the spring had broadly anticipated improved business activity in the year ahead, now expect a stagnant market during the period, KPMG pointed out, with just half of the manufacturing executives saying activity would rise, compared with June when 71% of them expected better business activity.

    Globally, expectations for higher business activities continued dropping to 42% of manufacturing respondents in October, compared with 55% in June and 61% in February.

    “Our survey findings underscore the ‘wait-and-see’ mood that has taken over this market of unprecedented uncertainty,” noted Lynne Doughtie, advisory vice chair for KPMG. “Although there is not much upside in the sentiment of the manufacturing sector leaders, most see the market changing very little over the next twelve months, with only a slight uptick in those who believe their key indicators will fall in the year ahead.”

    NACM’s Kuehl noted that the most negative news came in sales, which tumbled from the 61.4 high reached in September to 58.2 in November—the lowest reading in the last year—with the decline witnessed across the board in both the manufacturing and service sectors.

    He noted, however, that some of this is to be expected as the end of the year draws closer, and there is reason to expect gains in the months to come if the data on capital expenditure planning is reliable.

    “It would be nice to see some gains in select areas,” said Kuehl, “but there are no emergency warning signs popping up at this point either.”

    About the Author

    Sean Kilcarr

    Editor in Chief

    Sean Kilcarr is a former longtime FleetOwner senior editor who wrote for the publication from 2000 to 2018. He served as editor-in-chief from 2017 to 2018.

     

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