Manufacturing Surging, Housing Suffering

MarketWatch (6/13, Nutting) reported, "US manufacturing is on a tear, one of the few unambiguous positives in an economy that's still struggling to recover from the deepest downturn in generations. In some ways, this economic recovery fits the classic mold, as factories are running overtime to restock inventories depleted during the panic and to meet renewed demand for capital equipment and consumer goods."

This is "a familiar story of the business cycle: Excesses in production lead to excessive cutbacks, sowing the seeds for the eventual recovery." But "the missing piece this time, of course, is housing," which "after most recessions" has been "one of the main engines pulling the economy forward, as lower interest rates spur demand, which must be met by new construction. Not so this time around." Even with "the herculean efforts by the government...the sector is still severely out-of-balance."

     The Pittsburgh Business Times (6/11, Hoover) reported a survey by McGladrey stated smaller manufacturers are not doing nearly as well as larger ones. The report found "Nearly one-third of manufacturers and distributors with $500 million or more in annual revenue" claimed that "their businesses were 'thriving and growing.' Only 19 percent of companies with less than $25 million in revenue said they were thriving."

Tom Murphy, executive VP of manufacturing and wholesale distribution for RSM McGladrey, said, "The improvement in business conditions for larger companies is directly related to increased order activity spurred by growing optimism over the economy." He added, "But we're seeing lower levels of inventory and spot shortages in the supply chain given that small and midsized companies remain so risk-averse following the recession."

Summaries provided by Nam.org.