Manufacturers' results to gauge economic state | Shanghai Daily

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October 19, 2009

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Manufacturers' results to gauge economic state

THERE are signs that America's factories are stirring from one of the worst recessions in decades. Investors this week will find out how awake they really are.

Big manufacturers such as Boeing, Caterpillar and 3M will report results and, possibly, provide evidence that companies and consumers are starting to spend again.

America isn't as dependent on its factories as it was even 20 years ago. Consumer spending is the biggest driver of the economy, but it has shriveled recently as job losses and foreclosures mount. That's created talk of a manufacturing-led recovery although the economic data have been mixed. If nothing else, hints of a rebound at big industrial firms will boost the stock market.

The manufacturers reporting earnings next week depend on consumers to buy their food, toys, clothes and other products. But they also sell things the average person doesn't buy. So, they could benefit from big government stimulus programs like road construction, a growing health care sector, the military's need for more cargo jets or airlines looking for new planes.

Activity is picking up at American factories - overall industrial production has crept back up in recent months and General Electric Co said last Friday that its manufacturing profits grew by 4 percent in the last quarter. That said, even a hint of growth can seem like a significant up arrow in light of the battering manufacturers have taken. Two million jobs have been lost in the sector since the recession began in December 2007. And it will likely take a long time for manufacturers to return to where they were before the crisis.

'Reached bottom'

"We have reached bottom and we are at worst bouncing along the bottom," said Thomas J. Duesterberg, president and CEO of the Manufacturers Alliance/MAPI, a public policy economics research organization.

Smaller manufacturer Stanley Works is also reporting. And because copper is used in wires, pipes and other products found in homes, results from copper miner Freeport-McMoRan could give investors insight into the housing market.





 

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