Thursday, January 11, 2007

Manufacturing Survey Show Slower Growth

From Reuters

U.S. economic growth will moderate in the first half of this year and manufacturing will likely play its part in that slowdown, according to a quarterly survey of manufacturing executives released on Thursday.

The Manufacturers Alliance/MAPI Survey on the Business Outlook showed a slowing in the first half. But strong balance sheets and liquidity will help businesses weather a profit slowdown during the year.

The survey index fell to 54 from 64 in the Sept. 2006 survey, the lowest since a reading of 52 was recorded in March 2002 and breaking a streak of 16 consecutive quarters above 60.

We've seen similar performance from other manufacturing indicators over the last few months. They have all shown a drop in current activity but higher future expectations. I am a bit skeptical of future expectations, largely because it's difficult to see someone being pessimistic about the six-month outlook unless the economy is in a recession.

In short, it looks like the current expectations for manufacturing are for a slower growth environment.