Below is a graph of the sales to inventories ratio. As you can see the ratio has become flat, which implies businesses are simply keeping on hand what they believe they can sell. It represents only a 1.23 months supply of inventories, given the current sales rate.
Below is a graph of raw inventory changes. Notice inventories are nowhere near pre-recession levels.
In 2008, while the Recession was still a-brewing some of us tried in vanity and naivete to link the collapse of Manufacturing with the increase in unemployment and the Housing Crisis and then the Financial Crisis. Happily, we can move beyond the anecdotal to the empirical now for data on unemployment over the last decade. Many of us just sort of knew that when you put folks out of good jobs, they lose their houses, then they lose their Banksters.
Noel explains that, in addition to waiting for a loan guarantee from the Department of Energy, he must then get funding from investors. The irony is that, at a time when credit is tight, many investors are putting scarce resources into Chinese projects, not American.
While we are all back to the rah rah rally and economic cheerleading in the MSM, I thought this report on U.K. manufacturing was telling.
U.K. manufacturing production unexpectedly slumped in August to the lowest level since 1992, a sign the economy is struggling to shake off the recession.
Sales. The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for July, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $978.4 billion, up 0.1 percent (±0.2%)* from June 2009 and down 17.8 percent (±0.4%) from July 2008.
Inventories. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,332.5 billion, down 1.0 percent (±0.1%) from June 2009 and down 11.8 percent (±0.4%) from July 2008.
Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of July was 1.36. The July 2008 ratio was 1.27.
This is the longest inventory contraction since 2002.
The Obama administration has appointed Ron Bloom to be the new manufacturing adviser. He was head of the auto bail out task force.
Most interesting is he worked for the United Steelworkers Union, but has our classic Harvard MBA.
Since February, Mr. Bloom has been a senior adviser to Treasury Secretary Timothy F. Geithner. He sits on the president’s automotive industry task force. The White House said Mr. Bloom would continue that position and would expand his role to coordinate the administration’s manufacturing policy with the Commerce, Treasury, Energy and Labor departments.
The White House said Mr. Bloom would work with the National Economic Council to help lead policy development and strategic planning for “the president’s agenda to revitalize the manufacturing sector.”
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