U.S. 1st-qtr Manufacturing Activity Slips Further
May 23, 2003
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U.S. manufacturing activity slipped in the first quarter but pent-up demand for capital goods investment and a lower dollar should provide a boost in the second half of the year, a business group said. The Manufacturers Alliance/MAPI survey of first-quarter business activity showed 14 of 28 industries had inflation-adjusted new orders or production above year-ago levels, down from 17 industries in the fourth quarter of 2002.

"The long, drawn-out recession in manufacturing has created pent-up demand for capital goods investment," Manufacturers Alliance/MAPI chief economist Daniel Meckstroth said in the report. "The proposed tax cut, expected lower interest rates, and the falling value of the dollar should help the manufacturing industry pull out of the current double-dip recession in the second half of this year," he said.

The survey found 12 industries were in the accelerating growth, or recovery, phase of the business cycle; four were in the decelerating growth, or expansion, phase; two were in the accelerating decline, or early recession, phase; and 10 were in the decelerating decline, or late recession, phase. Industries recording double-digit growth in the first 3 months of 2003 included electronic computers, search and navigation instruments, industrial machinery, defense capital goods, photographic equipment, and communications equipment. The report also found manufacturing production as of April 2003 remained 7.1-percent below its peak in June 2000. More than 2.6 million manufacturing jobs have been lost in the last 5 years, or 14 percent of the pre-recession workforce, the Alliance said. (Reuters)

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