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From Bloomberg:
Manufacturing in the Philadelphia region shrank in November at the fastest pace in 18 years, a sign that the credit crunch and weak demand are causing companies to cut back.
The Federal Reserve Bank of Philadelphia's general economic index was minus 39.3 this month, weaker than forecast and the lowest reading since October 1990, from minus 37.5 in October, the bank said today. Negative readings signal contraction. The index averaged 5.1 last year.
The deepening credit crisis and economic slump are forcing companies to trim payrolls, investment and production. Slowing global demand is weighing on manufacturing, which accounts for about 12 percent of the U.S. economy.
``Manufacturers are getting hit by several different forces,'' Dean Maki, co-chief global economist at Barclays Capital Markets in New York, said in an interview with Bloomberg Television. ``Real exports are being hit pretty hard because the slowdown is heading abroad as well.''
Why is this important?
-- The NBER uses manufacturing activity as an indicator for when a recession starts.
-- Exports were a bright spot for the economy last year and part of this year. Europe's and Asia's slowdown along with the US consumer slowing his spending is obviously having an impact
-- Manufacturing employment has been declining since the beginning of 2007.
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2 comments:
Hale, Doesn't the 2nd chart show a sharp dropoff of manufacturing employment starting in 2001 leveling off in late 2003? What sectors added jobs between 2000 and 2007? What areas are losing the most jobs now? That would make a good post. Thanks for all you do here.
The loss of manufacturing jobs from 2001 to 2004 appears to be about 2.8 million. This segment never recovered. As I remember the increase in jobs from 2003 to 2008 were largely service and Government jobs. One reason the jobs picture was lean during the recovery was the influx of illegal immigrants. I am not sure if these people were fully counted as part of the workforce. This would also explain why construction could lose so many jobs and the unemployment rate not reflect it.
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