How Supply Managers See High-Tech Business
Staff -- Purchasing, 11/17/2005
- U.S. consumer spending declined for the second straight month in September, giving the U.S. economy considerable headwind as the fourth quarter began. Adjusted for inflation, real spending fell 0.4% in September after dropping 1% in August. That's the first back-to-back decline in spending in 15 years. Then, U.S. consumer sentiment tracked by the University of Michigan fell in early October to its lowest level in 13 years, as high gasoline prices and the fallout from hurricane damage continued to take their toll.
- The Wendover-Global Insight IT Spending Index for the third quarter dropped slightly from the previous quarter. While levels remain below historical highs, values indicate that information technology (IT) spending should continue to be robust for the balance of 2005. The Wendover-Global Insight index measures intentions of decision-makers to invest in new IT capital projects, typically purchases in the next six to nine months.
- Expect a "modest decline in housing starts" in 2006, says Harvey L. Karp, chairman of Mueller Industries, a maker of fabricated metal and plastics tubular products. Reason: "Over the next 12 months, the housing industry will be adjusting to higher prices, higher mortgage rates and more restrictive lending standards."
- Hurricanes Katrina and Rita delivered a battering to the Conference Board's index of leading economic indicators in October amid higher energy prices, weakened consumer confidence—the index was down to 85.0 from 87.5 in September and 105.5 in August—and increased claims for unemployment insurance. Conference Board economist Ken Goldstein warns of slower economic growth through the end of the year.
- Economist Ethan Harris at the Lehman Brothers brokerage has gone bullish about the domestic economy. His assumption is that industrial production and retail sales will grow enough to shake off 12 consecutive quarter-point increases in interest rates. He predicts the economy will grow at a 3.5% annual clip during the first quarter of 2006, up from his earlier 3.25% projection. Note: The latest consensus Blue Chip Economic Indicators forecast of 52 economists is 3.4% growth in the first quarter.
- In one of his last appearances to lawmakers before his term ends in January, Federal Reserve Chairman Alan Greenspan said the U.S. economy is poised for continued growth even after the shock of two hurricanes raised energy prices and increased the risk of broader inflation, adding that "The economic fundamentals remain firm."
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