PURCHASING magazine's August Business Survey results support the view that the economy will avoid a second dip into negative growth territory. The national Business Activity Index, which dropped to near neutral in July, recovered nearly two points in August (traditionally a slow month for manufacturing). Meantime, the Business Activity Index for chemicals-consuming companies gained six points in August and the indexes for metals- and electronics-consuming companies each gained nearly two points from July.

For the first time in seven months, the consensus forecast for U.S. GDP growth in 2002 has fallen. Culprits are a weaker-than-expected second quarter growth estimate for real GDP (1.1%) plus a substantial downward revision to growth estimates for the past three years, which, according to Blue Chip Economic Indicators, left "a slower growth trajectory through 1999 and 2000, with a more severe recession in 2001 than previously reported." Still, Blue Chip notes that, "It remains the prevailing view of the panel that the recovery from last year's economic downturn remains intact and that the odds of a 'double-dip' recession are relatively modest at present." Latest consensus forecast places real GDP growth at 2.3% for 2002 and 3.2% for 2003.

U.S. leading economic indicators are faltering, due mostly to persistent stock market and job losses. The Conference Board's U.S. Leading Index fell 0.4% in July as six of ten components recorded declines. The Weekly Leading Index (WLI) from the Economic Cycle Research Institute ( ECRI ) slipped recently to a six-month low of 120.1. ECRI attributes the WLI's decline to a dip in new mortgage applications, higher unemployment claims and falling stock prices, but insists the decline is merely a signal of slower growth rather than a return to recession.

With manufacturing demand growth slowing, good deals should be there for the taking in September. Indeed, PURCHASING magazine's Forward Demand Indexes tracking buyers' 30-day demand forecasts for various commodity segments are negative (below 50) in 10 of the 17 categories tracked and either at or near neutral (that is, no growth) in another five categories. Indeed, the only categories for which demand is expected to grow in September are transportation, energy and fabricated metals (for details see table on page 5). To participate on PURCHASING's electronic Business Survey panel, e-mail your name, title, company, location and a list of the commodities you buy in volume quantities to Jennifer Eno at jeno@reedbusiness.com.