How Supply Managers See Business
Staff -- Purchasing, 10/6/2005
- Hurricane Katrina reduced the rate of change in total industrial production by an estimated 0.3%, the Federal Reserve Bank said. Hurricane Katrina contributed to a drop of 1.1% in the production of chemicals and a drop of 0.9% in the output of petroleum and coal products. Economists said the report suggested that industrial production might be very weak in September, but would rebound later in the year.
- Damage from Hurricane Katrina is projected at $125 billion, according to Risk Management Solutions, a catastrophe risk-modeling firm, which sees insured damage at $60 billion. That would make Katrina far and away the costliest natural disaster in U.S. history, topping the $21 billion in insured losses caused by 1992's Hurricane Andrew or the $23 billion caused last year by four hurricanes. How much of the infrastructure will be rebuilt—and how long it will take to accomplish—is less clear.
- After rising a solid 3.2% in the first quarter, productivity growth for the business sector has been revised downward to just 1.8% in the second quarter and was expected to be weak again in the third quarter. This means that productivity growth has slowed from high rates in the early part of the recovery to activity more in line with an ongoing tepid expansion. New orders for manufactured goods fell 1.9% in July, the largest drop in 15 months.
- Recent data have suggested home sales may be slowing, and outgoing Federal Reserve chief Alan Greenspan has warned the nation's housing boom can't go on forever. Atop that, Merrill Lynch says in a research note that homebuilding companies have little exposure to the hurricane-damaged areas, with Louisiana and Mississippi representing only 1.8% of single-family housing permits.
- Economic officials from Louisiana, Mississippi and Alabama are working together to craft a package of tax credits and bonds to keep 70,000 businesses from leaving the region in the wake of Hurricane Katrina. Immediate goals are to make sure those companies do not leave permanently and have the resources to rebuild.
- Weakened U.S. business activity data raises concerns about economic growth overall. So much so, in fact, that economists polled by the Blue Chip Economic Indicators newsletter have cut growth in the third and fourth quarters to 3.6% and 3%.
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