How Supply Managers See High-Tech Business
Staff -- Purchasing, 5/20/2004
- The electronics sector of the economy is going to have a "very good" year in 2004, according to Doug Andrey, chief analyst for the Semiconductor Industry Association. Although consumer spending held up through the economic downturn of the past two years, businesses are just now starting to buy personal computers (PCs) and electronics equipment again. Chip factories are operating at a healthy 92% capacity, up from 63% at the bottom.
- Consumers, an important force shaping the economic recovery, spent modestly in March, helping the economy log solid growth in the last quarter. The Commerce Department says consumers boosted their spending by 0.4% in March. That followed another 0.4% increase in February, according to revised figures. Meanwhile, incomes also rose solidly in March, increasing by 0.4%. That came on top of a 0.5% gain in February. The increase was encouraging because income growth is a main factor in people's willingness to spend in the future.
- Midwest factories boomed in April at a clip that suggested a turnaround in manufacturing employment might be in the offing. Factory managers have sensed ample demand since they stepped up output, marking a year of expansion. They were right: New orders at U.S. factories rose strongly in March, "Every indicator is telling us that manufacturing is rebounding very strongly," agrees Key Mayland, chief economist at Clearview Economics.
- The U.S. economy expanded at a solid 4.2% rate in the first three months of the year, the Commerce Department reports. The U.S. economic growth rate over the past year now has reached a 20-year high of 4.9%, but signs are emerging that inflationary pressures appear to be building. The Federal Reserve's favored measure of core consumer prices rose at a 2% rate, up from 1.2% in the prior quarter and below 1% in early 2003. It was the biggest gain since the fourth quarter of 2001. The overall price gauge rose 3.2%, the most in three years.
- More proof the economy continues to grow comes from the latest Credit Manager's Index, which reached record highs in April. The survey by the National Association of Credit Management asks credit managers to rate favorable and unfavorable factors in the monthly business cycle. Favorable factors include sales, new credit applications, dollar collections and amount of credit extended. Unfavorable factors include rejections of credit applications, accounts placed for collections, dollar amounts of receivables beyond terms and filings for bankruptcies.
| Indicator | Period | Latest Period | Previous Period | Year Ago | % Chg/yr ago |
| Real GDP (B'96$, SAAR) | Q1 Final | 11447.8 | 10600.1 | 10708.6 | 6.9 |
| Consumer spend, dur gds | Mar | 195.2 | 189.2 | 173.5 | 12.5 |
| Bus investment, equip | Mar | 951.5 | 951.0 | 897.5 | 6.0 |
| PC board book-to-bill (ratio) | Mar | 1.1 | 1.15 | 0.9 | 22.2 |
| Semi equip book-to-bill (ratio) | Mar | 1.201 | 1.144 | 0.84 | 43.0 |
| High-tech IP* ('97=100) | Mar | 438.0 | 431.8 | 348.3 | 25.7 |
| Emp cost index (6/'89=100) | Mar | 170.8 | 168.9 | 164.4 | 3.9 |
| Dur gds orders (B$, SA) | Mar | 192.7 | 186.4 | 168 | 14.7 |
| Consumer conf ('96=100) | Mar | 115.3 | 115 | 110.9 | 4.0 |
| *Industrial production of computers + communication equipment + semiconductors. | |||||
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