How Supply Managers See High-Tech Business
Staff -- Purchasing, 11/18/2004
- Employment costs accelerated by 0.9% in the third quarter of 2004, in line with most forecasts. Benefit cost increases accounted for 40% of the increase in total costs. Wage cost growth accelerated slightly. Low wage costs suggest persistent weakness in the labor markets, and soaring benefit costs remain a serious concern to employers.
- Gross domestic product grew at a 3.7% annual rate in the third quarter, a pace that disappointed economists although it was better than in the 3.3% rate in the spring quarter. "The economy right now is running in the middle lane. We're not in the fast lane but we're not on the shoulder or in the breakdown lane,'' says economist Richard Yamarone at Argus Research.
- Spending on new construction was virtually flat in September, caused by the first decrease in housing construction outlays since early 2003. The 0.2% fall in residential construction offset a slight gain in nonresidential building activity. Overall, the September figures were weaker than Wall Street forecasters had been expecting.
- Sales of existing homes surprised on the upside in September, rising by 3% from the previous month to 6.75 million annualized units. Falling mortgage rates in July and August are likely behind the renewed strength in sales. This increase is the first in three months.
- Economists believe that the impact of soaring energy prices could slow economic activity in the final quarter of this year. High energy prices pose a risk to the economy, especially if they cause consumers and businesses to become extremely cautious and cut back on spending and investment, analysts say. Oil prices have been trading between $50 and $55 a barrel, a new record high.
- Sales of new homes surprised on the upside in September, with the pace of sales reaching 1.206 million units, well ahead of expectations. This gain puts the pace of sales 3.5% above the August volume.
- Industrial manufacturing executives are less confident about the U.S. and global economies than they were three months ago. While 75% were optimistic about the U.S. economy over the next year, their level of optimism was 11% lower than earlier in the year. "The majority of manufacturers are less upbeat about the economy—a sentiment consistent with the consensus across all industries," said Jorge Milo of the polltaker, financial services firm PricewaterhouseCoopers.
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