How supply managers see business
Staff -- Purchasing, 4/1/2004 2:00:00 AM
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PURCHASING's Business Activity Index continueditsclimb in March 2004, rising another two points. The percentage of manufacturing buyers reporting slower order rates at their companies fell to just 14%. Due mostly to current craziness in steel, the percentage of buyers experiencing some type of critical supply shortage has more than doubled to 63% in the past six months. So too has the percentage of buyers classifying general supply availability as tight. These perceptions of supply tightness, however temporary, are giving producers the leg up they need to raise prices; 63% of buyers surveyed in March say they're paying higher prices for materials.
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Buyers' perceptions of supply tightness may be rising, but commodity leadtimes have actually settled down nicely from their December 2003 spikes as U.S. factories have continued to ramp up from highly cautious production schedules of last summer and fall. PURCHASING's Leadtime Index (1992=100) did rise a bit in March 2004, but most of the stretching was concentrated in steel and steel fabrications, which are wacky due to key raw materials bottlenecks. Noteworthy leadtime declines were recorded last month in nonferrous metals (including copper), packaging, plastic resins, electronics, and MRO categories.
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Good news on the employment front. Manpower Inc.'s Employment Outlook Survey for second quarter 2004 finds 28% of U.S. companies with more optimistic hiring plans, an eight-point gain over first quarter. Manpower's Net Employment Index rose to 22 in the latest survey, a doubling from its year ago level. Manufacturers of both durable and nondurable goods show the most robust job outlooks in three years. The employment picture for construction workers is the strongest it has been since 1978, Manpower says.
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Recent upward commodity price moves are starting to push the general inflation indicators higher. Example: The Economic Cycle Research Institute's U.S. Future Inflation Gauge (USFIG) has risen to a four-month high of 116.0. A report from ECRI noted that "inflation pressures are finally starting to stir."
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Price panelists wanted. PURCHASING is now collecting source data for its Transaction Pricing service online. Incentive to participate in the new online survey is free access to PURCHASING's monthly Transaction Price data. To find out if you're eligible to be included on PURCHASING's Transaction Price Survey panel, e-mail a list of commodities you buy in volume quantities to amillenporter@reedbusiness.com.
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