Manufacturing Sends Mixed Economic Signals

ByJohn S. McClenahen As the production of durable goods continued to decline, U.S. manufacturing output in April fell 0.3%, the seventh consecutive month that it has contracted. Producers of high-technology goods, industrial machinery, and primary metals recorded notable losses, adding up to 0.6% decline from their March mark, reveal Federal Reserve Board data. Among manufacturers of non-durable goods, declines in textile and apparel were offset by increases in petroleum products leaving output of non-durables unchanged from its March level. Total U.S. manufacturing output for durables and non-durables is now 1.6% below the level of a year ago. U.S. factories are running at only 77.1% of their capacity, with the operating rate for manufacturers of computers, communications equipment, semiconductors, and other high-tech goods having fallen in April to 73.4%, more than 6.5 percentage points below their July 2000 peak. Meanwhile, as incongruous as it may seem, a 6% increase in executive searches during this year's first calendar quarter suggests that the U.S. economy may be into recovery by yearend, asserts the Assn. of Executive Search Consultants, New York. Compared with the fourth quarter of 2001, executive searches in manufacturing advanced 25% during the first three months of this year, with pharmaceuticals up 52% and computer and electronic products up 39%. Executive search data tend to lead actual U.S. economic performance by about six months.