By Mark Pender
NEW YORK (MNI) – MNI’s U.S. capital goods indicator edged two
tenths higher in the July 20 period to a 45.3 level that remains well
below 50 to indicate significant contraction in year-on-year business
activity, according to the results of MNI’s weekly survey released
Monday.
Sales are +1.3% year-on-year with foreign exchange an important
headwind, shaving two percentage points from sales.
Income improved four percentage points in the period to -1.0% for
the best reading in six weeks. Sample size is 289 companies.
MNI’s data point to modest sequential sales growth in the second
quarter. The government will post durable goods data for June on
Thursday.
The third quarter is another question, however. Worries are rising
over the whole second half with Europe the number one concern and with
the rising dollar another major concern.
Many in the sample plan to rely on backlogs to meet second-half
targets and some are hoping orders that were pushed back during the
second quarter will be booked in the coming months.
Cost actions at some companies are accelerating and warnings are
appearing that sales cycles may begin to lengthen as the November
presidential election approaches.
But it definitely is not all doomsday with some companies reporting
continuing strength. These comments are from crane & hoist maker
Columbus McKinnon (CMCO) which is reporting steady, nearly double-digit
sales growth:
“Although there is skepticism and concern regarding the global
economy, we continue to see strong demand in our markets. We remain
cautiously optimistic as orders continue to grow despite the difficult
global economy, and we are encouraged with the pipeline of
opportunities.”
Editor’s Note: MNI compiles its capital goods index based on a
weekly sample of company news and data.
** MNI New York Bureau: 212-669-6430 **
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