News and New Products

Economic Data Mostly Positive

By James Haughey -- Electronic News, 9/28/2004

U.S. manufacturers have solidly recovered from a few slow months caused by the slowdown in consumer spending earlier in the summer. Total durable goods shipments rose 1.7 percent in the preliminary August factory sales report from the Census Bureau.

But August sales results were mixed last month for electronics. Computer and semiconductor shipments were still restrained by sluggish Asian export sales while telecom equipment shipments soared.

U.S. computer and semiconductor manufacturers both had 1.1 percent declines in the value of their August shipments, but these drops followed outsized sales gains in July, even larger than reported initially. Weaker memory and processor prices likely caused the decline in chip sales rather than reduced parts production.

Telecom equipment sales jumped 7.4 percent in August from July on top of a 3.5 percent rise the previous month. Also, orders increased more than 12 percent in the last two months and inventory/sales ratio fell sharply back to the late 1999/early 2000 level.

August shipments were very strong in other end markets for electronic components. The volatile aircraft and motor vehicle markets both had unusually large monthly gains. Aircraft sales rose 6.6 percent and are now 9.2 percent higher than a year ago. Car and truck sales rose 5 percent to 6.1 percent above last August. Neither industry is expected to post similar huge gains in the final months of the year, but no decline from the August sales level is expected.

Machinery manufacturers had a 1.1 percent sales decline in August but the forecast month-to-month sales trend remains at about 0.8 percent. Electrical product manufacturers boosted sales 1.4 percent in August following a 3.5 percent rise in July. These are the first significant gains so far in this business expansion. Further sales gains are expected over the next year averaging about 0.5 percent to 0.6 percent a month.

James Haughey is director of economics at Reed Business Information, the parent company of Electronic News.