U.S. Leading Economic Index Rose 0.6% in July!

By Bob Willis

Aug. 20 (Bloomberg) -- The index of U.S. leading economic indicators rose in July for a fourth consecutive month, another sign the worst recession in seven decades is almost over.
The Conference Board’s gauge of the economic outlook for the next three to six months rose 0.6 percent, less than forecast, after a revised 0.8 percent increase in June, the New York-based group said today. The coincident indicators index, a gauge of current economic activity, was unchanged after falling every month since October.

Fewer job losses, rising stock prices and a renewal of factory output all indicate government efforts to stem the financial crisis and revive the economy are paying off. Even so, a jobless rate forecast to reach 10 percent and falling home values are a reminder that any expansion will be muted as consumers rein in spending and boost savings.

“Overall this is pretty good news, suggesting the recession is coming to an end,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “The stabilization in the coincident index is a strong signal that activity is now leveling out.”

The main index was forecast to rise 0.7 percent, according to the median of 52 economists in a Bloomberg News survey, after an originally reported increase of 0.7 percent in June. Estimates ranged from gains of 0.1 percent to 1 percent.

Philadelphia Fed
A separate report today showed manufacturing in the Philadelphia region unexpectedly expanded in August for the first time in almost a year. The Federal Reserve Bank of Philadelphia’s general economic index climbed to 4.2, the highest level since November 2007, from minus 7.5 in July, the bank said today. Figures from the Labor Department, meanwhile, showed jobless claims unexpectedly rose last week.

Six of the 10 indicators in today’s leading index report added to the index, three subtracted and one was neutral. The biggest lift came from a positive spread between long- and short-term interest rates, followed by drops in jobless claims, a longer factory workweek, rising industrial supplier deliveries, stock prices and orders for capital goods. Weaker consumer expectations, declining money supply and falling building permits pulled it down. A gauge of new orders for consumer goods and materials held steady.

New applications for unemployment benefits fell to an average of 559,000 in July from 616,000 in June. They rose to 576,000 last week from 561,000 the week before, the Labor Department said today.

Factory Workweek
The factory workweek rose to 39.8 hours in July, the highest since January, from 39.5 in June, the Labor Department said Aug. 7. Automotive plants are boosting output in response to signs that demand is recovering as they benefit from government incentives of up to $4,500 for consumers who trade in gas guzzlers for fuel-efficient vehicles.

General Motors Co. this week called back 1,350 union workers, its biggest one-time gain in jobs since 2006, as it boosts second-half production, partly in response to demand from the Obama administration’s “cash for clunkers” program. Ford Motor Co. last week said it is boosting factory output by 26 percent in the second half of the year to meet rising demand created by the trade-in program.

A 1 percent gain in the average level of the Standard & Poor’s 500 Index in July from the prior month contributed to the leading index. The S&P 500 has soared 48 percent since March 9, when it reached its lowest level in more than 12 years, as data signaled the economy may be turning around.

Consumer Expectations
Meanwhile, consumer expectations for the next six months fell in July and continued falling this month, according to the Reuters/University of Michigan survey of sentiment released last week.
Seven of the 10 indicators for the leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times.

The Conference Board estimates new orders for consumer goods, bookings for capital goods, and the money supply adjusted for inflation.
The National Bureau of Economic Research, the arbiter of when recessions begin and end, follows the coincident index to help it time downturns. The index tracks payrolls, incomes, sales and production.

The gauge of lagging indicators fell 0.3 percent following a 0.7 percent decrease in the prior month. The index measures business lending, length of unemployment, service prices and ratios of labor costs, inventories and consumer credit.

June Business Inventories Fall; Sales UP!

Washington, August 13, 2009-

Total business inventories fell by a larger than expected 1.1% in June, marking the eighth consecutive month of inventory declines of 1% or larger, the Commerce Department reported today.

Economists were expecting a smaller 0.9% decline after inventories fell 1.0% in May (since revised down to a 1.2% decline). Inventories have now fallen for ten consecutive months and are down 9.8% over the year.
Article Controls

Retail inventories fell 1.0% in June, while wholesale inventories, as Commerce has already reported, fell 1.7% and manufacturer inventories fell 0.8% in the month. Within retail, inventories at auto and parts dealers fell 2.8%, carrying much of the overall inventory decline.

Excluding autos, retail inventories fell 0.3%, helped by a 2.2% decline in building material supplies and smaller declines in inventories at furniture, food and clothing stores. The only inventory increase within retail was at general merchandise stores, where stockpiles increase by 0.8%.

Meanwhile, business sales shot up by 0.9%, the largest increase since June 2008!Manufacturing sales rose 1.4% and merchant wholesaler sales rose 0.4% in June. Retail sales rose 0.9%, thanks in part to a 1.9% increase in auto sales.

Excluding autos, sales rose 0.7% as a 0.2% increase in sales at food and beverage stores managed to offset declines in every other retail category.

Electronics Buyers Will Increase Orders!

Jim Carbone -- Purchasing, 8/12/2009 2:28:38 PM EDT

Forty-seven percent of buyers responding to the latest Purchasing survey say they will increase their purchase orders for electronics over the next 90 days, an indication that demand for electronics equipment is increasing according to Purchasingdata.com.

About 33% of electronics buyers said that purchase order levels would be steady over the next 90 days, while 20% said they would decrease, according to purchasingdata.com's monthly survey of electronics purchaser.

By comparison, on July 31% of electronics buyers said that orders would decline, while 37% said they would remain the same and only 32% said orders would increase. The survey also found that 73% of buyers say prices for electronics are the same as they were in July, while only 12% said prices were higher than in July.

Many electronics buyers reported business was picking up in early August. A healthy 41% said business was better than in July when only 30% reported improving business.

U.S. Factory Orders UP!

Aug. 5 (Bloomberg) --

Orders placed at U.S. factories rose for a third month in June as oil prices rose and demand increased for goods such as metals and construction equipment.

Bookings gained 0.4 percent after a revised 1.1 percent increase in May that was smaller than previously estimated, the Commerce Department said today in Washington. Excluding demand for transportation equipment such as cars and airplanes, which tends to be volatile, orders rose 2.3 percent.

The factory slump is easing as leaner inventories, signs business investment may pick up and improving demand from overseas reinforce forecasts that the recession will end this year. A federal “cash-for-clunkers” program has started boosting demand for cars, helping the auto industry. At the same time, job losses will mean a slow, muted economic recovery.

“Manufacturers’ customers are growing more comfortable with the level of their stockpiles, which sets the stage for an increase in orders and production,” Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report.

U.S. service industries unexpectedly contracted at a faster pace in July as concern over rising unemployment gripped consumers. The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, fell to 46.4 from 47 in June, according to the Tempe, Arizona-based group. Fifty is the dividing line between expansion and contraction.

Factory orders were forecast to fall 0.8 percent, after a previously reported 1.2 percent gain in the prior month, according to the median estimate of 62 economists surveyed by Bloomberg News. Estimates ranged from a decline of 2.1 percent to an increase of 1.6 percent.
Orders for durable goods, which make up just over half of total factory demand, fell 2.2 percent, after a 1.3 percent increase the previous month.

Civilian aircraft orders plunged 39 percent after gaining 60 percent the prior month. Bookings for motor vehicles and parts increased 1.5 percent after falling 4.7 percent.
Sales of cars and light trucks fell to a 9.7 million annual rate in June from a 9.9 million annual rate the month before, according to Woodcliff Lake, New Jersey-based industry research firm Autodata Corp.

In July, sales rose to an 11.3 million pace, the highest since September, Autodata reported this week. That compares with February’s 9.1 million rate, which was the lowest since 1981.
“Perhaps the worst is behind us,” Ford Motor Co. sales analyst George Pipas said in an interview with Bloomberg Television on Aug. 3. “Consumers are feeling better than they did six to nine months ago.” Orders for construction machinery increased 11 percent after rising 10 percent the month before.

Orders for electrical equipment, appliances and components rose 1.3 percent, while orders for primary metals rose 9 percent. Bookings for capital goods excluding aircraft and military equipment, a measure of future business investment, rose 2.6 percent after a 4.3 percent gain. Shipments of those goods, used to calculate gross domestic product, increased 0.7 percent after falling 0.4 percent the month before.

Orders for non-durable goods including food, petroleum and chemicals rose 2.7 percent in June after a 0.9 percent increase a month earlier. Bookings for petroleum and coal products rose 13 percent after gaining 10 percent.

A barrel of crude oil on the New York Mercantile Exchange rose to an average $69.70 in June from $59.21 the prior month. Factory inventories fell 0.8 percent in June, the same as the prior month, and manufacturers had enough goods on hand to last 1.42 months at the current sales pace, down from 1.45 months, Commerce said today.

The Institute for Supply Management’s factory gauge rose to an 11-month high of 48.9 in July, while remaining below the breakeven point of 50, the Tempe, Arizona, group said on Aug. 3. Readings for new orders and production jumped to the highest level in more than two years, while a measure of exports showed the first expansion in overseas demand since September.

A record-breaking drawdown of inventory is setting the stage for future growth. Stockpiles fell at a $141.1 billion annual rate in the second quarter, the most ever, Commerce said on July 31. Commerce also said the economy shrank at 1 percent pace in the second quarter, less than estimated, after a 6.4 percent contraction from January to March.

Economists at JPMorgan Chase & Co. and Deutsche Bank Securities Inc. were among those raising forecasts for U.S. growth after last week’s GDP report.
Gross domestic product will expand at a 3 percent annual rate this quarter, the best performance in two years, said Bruce Kasman, chief economist at JPMorgan in New York. That’s up from his prior estimate of 2.5 percent. Deutsche Bank Chief U.S. Economist Joseph LaVorgna lifted his average growth estimate for the second half of 2009 to 2.25 percent from 0.5 percent.
Nonetheless, some companies remain wary. Nucor Corp., the second-largest U.S.-based steel producer, on July 23 reported its second-ever loss as the global recession cut demand for the industrial metal.

“The uncertainty in our economy is still very high,” Nucor said in a statement. “We are concerned that the marginal uptick in orders is not representative of an increase in ‘real’ demand but more a result of both inventory adjustments and concern over rising prices.”

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World Copper Prices JUMP to $2.70/LB!

Analysts see signs of higher demand, prices ahead according to Tom Stundza -- Purchasing, 8/5/2009 3:06:33 PM EDT

Copper, being one of the best barometers of economic activity, makes its price an excellent way to gauge the pending recovery in the global economy, suggests metals analyst Michael Gambardella of J.P. Morgan Securities in New York.

At $2.70/lb this week on the London Metal Exchange on Tuesday, spot copper cathode is at the highest level of 2009 and the highest since $3.17 last September. The year-to-date LME average is $1.91 but has boosted the 2010 copper price average forecast to $2.17/lb.

Copper is used in power and construction and the early-August price, up from the $2.36 average in July got a boost from news that pending sales of previously owned U.S. homes rose at a faster-than-expected pace in June. The housing data followed positive manufacturing data from around the world that bolstered the view that the global economy was pulling out of a steep downturn.

"Everything seems to be in place for continued strength" analyst Joel Crane at Deutsche Bank tells Reuters, noting there is growing sentiment in equity and commodity markets that the economy is improving faster than originally thought." That's why most forecasters now say there will be growth in gross domestic product in July-September after declining in five of the past six quarters.

Meanwhile, Goldman Sachs suggests to clients in a recent note that copper supply constraints at a time of improved demand this half could mean "that risks to our copper price forecasts are skewed to the upside." The brokerage's 2009 copper price forecast is $2.18, moving to $2.63 in 2010.

Chinese imports of unwrought copper rose to 475,999 metric tons in June from 422,666 metric tons in May, a 12.6% month-over-month growth. So, analyst Jim Lennon at Macquarie Bank in London says "apparent copper demand in the first half was probably up 55-60% year-over-year, suggesting stock building of 400,000-500,000 metric tons, so there remains a widespread expectation of a future slowdown in import demand."

GFCI Plugs Available for Your Appliances!

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Contact High Tech Connections today for additional information on these versatile GFCI plugs.

Rugged Computing for Demanding Workplaces!

Modern Materials Handling reports on the The Duros 1214 fixed-mount PC. The unit features an ultra-rugged touch screen polysilicon display and all-in-one aluminum housing to withstand the rigors of warehouse and shipping environments.

The Duros 1214 fixed-mount PC features an ultra-rugged touch screen polysilicon display and all-in-one aluminum housing to withstand the rigors of warehouse and shipping environments. It is sealed to IP-65 and exceeds MIL-STD-810F standards for drop, vibration, shock and altitude.

Mountable to forklifts, pallet trucks and automated guided vehicles, the compact unit includes a 12.1-inch SVGA resistive touch screen display. The computer is powered by an Intel Celeron M processor and can run Windows XP, Embedded or Vista, and Linux. Compact flash storage up to 64 GB and four USB 2.0 ports are provided.

A backup battery generates up to 20 minutes of continuous use.

Lego Contest Out West Keeps Going!

Lego is a combination of two Danish words -- "leg" and "godt" -- which, when put together, mean "play well."When she opened Toy Town in downtown Casper, Wyoming during the 1980s, Dalene Lockhart hoped children in the area would play well after shopping at her store.

In 1988, the Lego company sent a promotional contest idea to Lockhart, who decided to try it out. The idea: Hold a Lego contest and see what kids come up with. Encourage creativity. Give prizes.More than 20 years later, Lockhart still helps children play well, and still holds a Lego contest each year.

"It was written up as a promotional thing, so we wanted to try it. And in the '90s we almost quit because there weren't many entries," Lockhart said. "But when we tried to stop it, we got a bunch of calls and decided to keep it going.

"The contest used to be held in July, but when the county fair moved, Lockhart decided to hold it during the last week of summer vacation. This year, judging will be on Aug. 15th.

Now, the contest receives about 80 to 100 entries each year."We've had a little bit of everything," Lockhart said of past contest entries. "We've had baseball games, where people set up a stadium and put in a little baseball scene.

One year someone made a model of a computer. It had the keys and a disk that went in and out, and a monitor made out of black Legos."She's also seen Eiffel Towers, bridges, space ships, cell phone models and birthday cakes."Last year, the winner was a castle," she said. "It was really elaborate."Kids are split into four age groups -- 6 and under, 7 to 9, 10 to 12, and 13 and older.

First-, second- and third-place prizes will be given out for each age group, and every entrant will get some sort of smaller prize as well. An overall best-in-show prize will also be awarded.The only rules require that kids use their own Legos, and the final product can't be more than three square feet at the base, "just because we don't have that much room," Lockhart said.

Kids can work on their projects for as long or as little as they'd like."Some say they've been working all summer. Some go home and come back an hour later," Lockhart said. "Some people, as they get older, if they're really into it, they plan year-round."Most of all, kids need to be creative, she said.

"We look for use of color, stability and overall creativity. We look for kids to not use just a kit."
Author is Megan Lee, Star Tribune.

The Ford Mustang Has Seats of Soy!

After long period of development, Ford Motor Company, Dearborn, Mich., and Lear Corp., Southfield, Mich., recently began an industry-first use of functionalized soybean oil in the manufacture of flexible, polyurethane foam for automotive seating. The use of renewable materials as a feedstock for Automotive Soy-Based Seating Foam offers many benefits including reducing environmental footprint, replacing limited petroleum-based products with sustainable materials, and providing an alternative material choice.

Development was not easy, however. Soy-based foams pose various challenges to manufacturers, including low chemical reactivity, blend separation, odor, fogging, and green strength. The team invented and developed new foam formulations to overcome all of these limitations and meet the stringent mechanical requirements of automotive seating, including adequate manufacturing cycle time.

First used in the company’s Mustang car, the seat will soon be added to other automotive lines.