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John’s Blog
10-18-10
Dear Friends,
In the news last week the National
Association of Business Economics forecast that the nations GDP will
be up 2.6% in 2010. It had been predicted to be 3.2% last May. The
group’s 46 economists believe that GDP growth will be moderate in
2011 due to low growth in household wealth and high unemployment.
The NABE also echoed the prediction by
the National Retail Federation that the upcoming retail season in
November and December will be up 2.3% from a year ago.
Speaking of retail, September sales
rose for the third straight month led by appliances, electronics, and
autos. The Commerce Department said that retail sales increased 0.7%
in July, 0.6% in August, and 7.3% in September when comparing year
over year numbers.
This is taken as a sign that the US is
not falling back into a recession.
The Manufacturers Alliance/MAPI
composite index showed that the manufacturing sector is holding
steady during troubled times by coming in with a reading of 77% in
September. This is the fourth straight month that the index reading
has been above 50% which separates expansion from contraction. The
high point this year was June when the index read 81%. Continued
growth is expected.
The Federal Reserve New York district
said that the Empire State Manufacturing Survey of general business
conditions improved to 15.73 in October from 4.14 in September. In
this survey the larger the reading over zero, the greater the rate of
month over month growth. October improvement was led by new orders
and improved employment.
The Commerce Department reported that
inventories increased in August for an eight month streak of growth.
Inventories are growing faster than sales with the inventory to sales
ratio of 1.27. This ratio means that it would take 1.27 months to
sell the inventory stockpile at the current sales pace.
The Labor Department reports that the
Producer Price Index increased 0.4% in September for the third
straight monthly gain. The 0.4% reading beat the forecast of 0.1%
which measures the prices paid to producers (farms and factories)
indicating strong demand for products and goods.
The Commerce Department also reported
that the US trade deficit increased by 8.8% in August following a
decline in July. The trade deficit stands at 46.3 billion dollars
led by demand for imported cars and equipment.
The Department of Transportation said
their Freight Transportation Index clicked up in August for the sixth
year over year increase of 1.2%. The August index is at 97.6 and for
comparison to really good times; the reading was at 112.9 in May of
2006 when it peaked. The TSI is a seasonally adjusted monthly index
that measures the services output by all for-hire transportation
modes.
The railroad
industry continues to see strong numbers in intermodal transportation
as tightened truckload capacity makes intermodal a good alternative.
Sustained imports greatly contributed with container traffic surging.
Through Oct. 2,
major railroads in North America had originated 10,552,084 total
intermodal shipments this year, of which 1,323,199 were trailers and
9,198,885 were containers. Through the first 39 weeks of 2010,
trailer intermodal volume was up just 2.3 percent while container
loads rose 17.3 percent.
At Wagner we continue to see improved
volumes during the holidays and are getting many requests for help
with overflow. In my experience, this kind of business is a
precursor to companies expanding as they seek to control costs by
keeping their commitments short term.
As you plan for 2011 please let me know
if we may contribute to your planning by collaborating on tactics
that will help your company reach its goals.
Wagner has a strong capability in
distribution center and fulfillment operations coupled with a
complete range of value added services. Transportation is about 1/3
of our business so let Wagner see if we may add value in a
transportation relationship.
Have a great week!
John Wagner Jr
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