Monday, August 17, 2009
World recovers from recession; U.S. will be next
The worldwide manufacturing sector, the fount of any lasting global recovery, is gathering unexpected steam.
Although glimmers of a turnaround appeared in mid-spring, the momentum has recently accelerated, providing further evidence the deleveraged recession is on the mend.
Although U.S. factory orders and manufacturing activity have more recently indicated a halt in a yearlong downturn, a European rebound has already returned to levels last seen just after the occurrence of the global credit implosion last year.
With China, Japan and India already taking the lead, powered by jumbo stimulus plans, and Brazil and Russia following suit, the ailing industrial sectors of the United Kingdom and Italy have started to boom again.
The European improvement has been broadly based, but has come forth especially strong in the timber and paper industries.
However, the overcapacity occasioned by months of manufacturing depression has not halted ongoing personnel layoffs or increased capital spending plans.
In an indication that the inflation specter is not lurking in the immediate future, output prices have as yet not been forthcoming. This reinforces the belief that overcapacity and a continuing glut of raw materials and ancillary manufacturing supplies will keep prices stable for some time to come.
As the U.S. manufacturing sector follows suit, a similar set of circumstances will manifest itself, as America's deflating industrial arena reverses an 18-month downward cycle.
An additional plus awaiting recovering American manufacturers is the increasing need for just-in-time delivery as inventories of components, as well as finished goods, have been cut to the bone.
The reduction of transportation costs within the United States also has reduced the advantage of imports, along with the shortened time factor.
According to the Current Business Outlook, commissioned by major accounting firm KPMG, global confidence in the recovering world industrial sector is surpassing previous expectations.
Rancho Mirage resident Morris R. Beschloss writes a regular blog on mydesert.com. He can be heard on KPSI Radio 920 AM from 8 to 9 a.m. every Friday and on KGAM Radio 1450 from 9 to 10 a.m. Saturdays. He also can be seen on KESQ Channel 3 and Time Warner Cable TV Channel 111.
Although glimmers of a turnaround appeared in mid-spring, the momentum has recently accelerated, providing further evidence the deleveraged recession is on the mend.
Although U.S. factory orders and manufacturing activity have more recently indicated a halt in a yearlong downturn, a European rebound has already returned to levels last seen just after the occurrence of the global credit implosion last year.
With China, Japan and India already taking the lead, powered by jumbo stimulus plans, and Brazil and Russia following suit, the ailing industrial sectors of the United Kingdom and Italy have started to boom again.
The European improvement has been broadly based, but has come forth especially strong in the timber and paper industries.
However, the overcapacity occasioned by months of manufacturing depression has not halted ongoing personnel layoffs or increased capital spending plans.
In an indication that the inflation specter is not lurking in the immediate future, output prices have as yet not been forthcoming. This reinforces the belief that overcapacity and a continuing glut of raw materials and ancillary manufacturing supplies will keep prices stable for some time to come.
As the U.S. manufacturing sector follows suit, a similar set of circumstances will manifest itself, as America's deflating industrial arena reverses an 18-month downward cycle.
An additional plus awaiting recovering American manufacturers is the increasing need for just-in-time delivery as inventories of components, as well as finished goods, have been cut to the bone.
The reduction of transportation costs within the United States also has reduced the advantage of imports, along with the shortened time factor.
According to the Current Business Outlook, commissioned by major accounting firm KPMG, global confidence in the recovering world industrial sector is surpassing previous expectations.
Rancho Mirage resident Morris R. Beschloss writes a regular blog on mydesert.com. He can be heard on KPSI Radio 920 AM from 8 to 9 a.m. every Friday and on KGAM Radio 1450 from 9 to 10 a.m. Saturdays. He also can be seen on KESQ Channel 3 and Time Warner Cable TV Channel 111.
