Manufacturing Will Grow Only 1% In 2001's Second Half, Says NAPM

Jan. 13, 2005
By John S. McClenahen Financial bears remain active as manufacturers await the possibility, this month and next, of additional demand-stimulating interest-rate cuts by Chairman Alan Greenspan and his colleagues on the Federal Open Market Committee. ...
ByJohn S. McClenahen Financial bears remain active as manufacturers await the possibility, this month and next, of additional demand-stimulating interest-rate cuts by Chairman Alan Greenspan and his colleagues on the Federal Open Market Committee. Second-half 2001 revenue growth for U.S. manufacturing will be a weak 1%, projects the National Assn. of Purchasing Management (NAPM). Purchasing executives "have lost the bullish outlook that has been part of recent forecasts," confirms Tempe, Ariz.-based NAPM. In a development that should not surprise anyone, dramatically lower capital spending is a major factor for the purchasing manager's change in outlook. They now predict capital expenditures will decrease 8.3% this year, compared with the 1.8% increase for 2001 they expected just six months ago. Only 17% of those responding to NAPM's most recent economic-forecast survey expect manufacturing's capital outlays to rise this year. Meantime, 51%, a narrow majority, foresee them falling, with an average decrease of 32.4%. One-third of the purchasing executives predict 2001 capital expenditures will be comparable to 2000's. Also worth noting: The executives expect manufacturing to continue to reduce their purchased-inventory-to-sales ratios, and they foresee manufacturing employment declining by 1.3%.

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