Economic Roundup for SeptemberSeptember 25, 2009 By: Sensor Contributor
Although conditions for most of America's manufacturing industries are grim, with segments such as automotive seeing more than a 30% drop in shipments over the past year, there is still a little bit of good news out there: shipments and new orders aren't dropping as fast as they were in the first and second quarters of 2009, and in many cases seem to have leveled off. Some of this stabilization is likely the result of extensive government stimulus spending. For example, automobile unit sales in August rose 30% over that of July, which was clearly a result of the 'cash for clunkers' program. One downside to this bonanza is that while retail auto sales have been rising since February, shipments by U.S. manufacturers have not been on the same trajectory, which is bad news if your customer base consists largely of the big 3 automobile manufacturers. Another downside to stimulus packages is that sales may return to where they were when the stimulus has been spent. To provide long-term benefits, public stimulus spending must be focused on areas which create continued demand for goods and services.
While there seem to be general indications that the economy as a whole has bottomed out and is on the way up, it is unclear whether this is also true for industrial segments, as the degree of month-to-month variation in the data makes it difficult to clearly identify small upward (or downward) trends. In any case, it is unlikely that the industrial economy will see significant gains until consumers start spending money again and businesses increase their rate of capital investment. Economists debate whether this recession will be a 'V', with a fast recovery, a 'U', with a slow recovery, or a 'W', with a brief period of improvement followed by another decline before the real recovery begins. Recent projections by the Federal Reserve point to improvements in GDP in 2010, but continued high unemployment for at least another year. Economic forecasting, however, is still a very inexact science (bordering on voodoo) and one should keep in mind that predictions of any nature are often wrong.
One sensor-related industry segment that seems to have already gotten back onto a growth track is that of instrumentation and control (which includes medical devices). Although it is hard to point to exactly where the growth is coming from, it is likely being driven by exports, and of course the ever-increasing, and effectively recession-proof medical industry here in the U.S.. Although the economies of the U.S. and most of Europe are expected to shrink this year, emerging economies such as China and India are expected to see continued strong growth, which may provide significant market opportunities for sensor and control manufacturers.
If you are interested in finding more details on how the U.S. industrial economy has been recently performing, you can find them in our Bulletin "Selected US Economic Activity JUL07-JUL-09".
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