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June Truck Tonnage Jumps 5.4% in Eighth Straight Gain The U.S. economic stimulus package and inventory replenishment by customers powered a 5.4% rise in truck tonnage during June compared with last year, the eighth consecutive monthly increase, American Trucking Associations said.
Factory Orders Up More than ExpectedThe manufacturing sector has continued to defy many of the assumptions of economists. The state of the auto industry and theconstruction sector would suggest that there would be little good news coming from the industrial sector but the data is telling a slightlydifferent story. Durable goods orders were up by 0.8% in June and that has better than most had expected and now there is news thatfactory orders are at levels not seen in six months. The fact is that the industrial sector is deeply divided between those sectors that aredoing reasonably well and those that are sliding into desperate financial straits. It is pretty obvious that the news from the automobilemanufacturing sector has been bleak and few expect any real reversal of fortune until well into 2009. The aerospace sector has had adecent year in contrast – due in no small part to the demand for military equipment to conduct activities in both Iraq and Afghanistan. Thesteel industry has also seen a surge from that demand. The level of defense capital goods rose by 16.9% and that fueled a good deal ofancillary activity. There has also been a major increase in demand for steel and other basic metals.Analysis: The issue now is whether these numbers are anomalies or harbingers. The defense related activity is limited in terms of itslongevity but realistically there is likely to be a strong demand for these goods over the next two or three years. The drawdown onmilitary equipment has been severe and most of the equipment that belonged to Reserve and National Guard units will have to bereplaced sooner than later. The demand for metals and steel is also likely to be something that continues to grow as there is demand inthe US and from overseas consumers.The moribund industries are another story. The recovery of the automotive industry will depend on recovery of consumer confidenceand the engagement of the banking community. The consumer is not interested in the majority of the vehicles on dealer lots and haslimited interest in what is on offer by the Big Three automakers. Even if there is interest, the financing options available are limited asmany of the regional banks are suffering from the ongoing credit crisis. The most optimistic assessments of auto industry recovery holdthat there will be little to get excited about until deep into 2009.Industries that are connected to the construction sector are also unlikely to see much improvement until the crisis in the housing sectoras a whole is over. The sense is that some small improvement has been seen in housing and some have ventured to suggest that the bottomof the market may have been reached in some key states like California. Given the record number of foreclosures and the fact that there isstill a major overhang in terms of unsold homes, it will be very slow going in terms of housing recovery.The fastest growing sector in terms of industrial growth remains that which is connected to the export sector. Those companies thathave found markets for their products in overseas markets have been enjoying the weak US dollar and have contributed to the recordsetting trade figures month after month. At some point these advantages will erode but for now the opportunities have been developingrapidly. The biggest concern within the export sector is that slow growth in Europe will erode those opportunities and reduce theadvantage that has been provided by the dollar decline. The dollar situation is not as favorable in Asia as has been in the Eurozone and
that has limited US opportunity in the fastest
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