Logistics and Business Manufacturing: Economic Data Presents Mixed Views for Recovery

At a time when freight volumes remain depressed amidst the recession, coupled with reports indicating that the economy has “bottomed out,” it is very clear that those optimistic for a near-term recovery need to take a long-term view.

Some recent economic indicators for this sentiment include:

• A recent report from the Federal Reserve indicating industrial capacity usage in May, at 68.3 percent, hit a record low in May.
• Retail sales in May fell 4.7 percent year-over-year, according to the National Retail Federation.
• The U.S. trade deficit rose to $29.2 billion in April from $28.5 billion in March, with (adjusted for inflation) exports and imports down 4.3 percent and 2.7 percent, respectively.

The news is not all bad, though. Recently-released data from Panjiva, an online search engine with detailed information on global suppliers and manufacturers, notes that May represents the third consecutive month that there was an uptick in the number of global manufacturers shipping to the U.S. May saw a two percent bump, following gains of two percent in February and eight percent in March. Panjiva said this is the first time it has seen three consecutive monthly increases since it began tracking this metric in July 2007.

Even though these numbers are heading in the right direction, the company cautioned that last spring it also saw some uptick in the number of global manufacturers shipping to the U.S., leading to the possibility that there may be a seasonal component to these findings. Also, the company noted the two percent May gain is “modest,” with the recovery to pre-trade levels likely to be a while.

“We are seeing some encouraging signs, but there is still a low level of overall activity in an absolute sense,” said Panjiva CEO Josh Green in an interview. “It feels like the ‘deer in the headlights’ moment is over.”

Another positive, he noted, is that the sense of economic panic from earlier in the year seems to be gone, but there is still a long way to go. Companies continue to be cautious in their approach to placing orders, according to Green, and they are much more cognizant of the risks that are in their supply chains.

Examples of this risk are directly related to the fallout from last October’s financial crisis, Green noted, with companies not being as diligent as they need to be when it comes to volatile conditions in the market.

Read the rest of the Supply Chain Management Review article here.