EMPLOYMENT net hiring continued;What I found interesting about the report was not so much the headline number, but the comments at the end of the report. Each month survey panelists are given the opportunity to leave a comment about how their business is doing. Here are the comments:
PRODUCTION and NEW ORDERS improved in tandem
ORDER BACKLOGS shrank;
INVENTORIES continued to show decreases.
1. Suppliers have cut staff so much there is no support team when a failure occurs, the response is slow, laborious and inadequate.
2. Tight raw material inventories both in-house and at suppliers are making planning very interesting. Conservative forecasts make this a prudent strategy but current skittish markets can either validate or wreak havoc upon it. Roll the dice.
3. Small business lending is picking up a little. Foreclosures on both Commercial and Residential properties are increasing. We are beginning to see an increase in people walking away from their mortgage obligations because of the decrease in the underlying values of their properties.
4. Just wondering how long this will last!
5. Look for consumer food prices to rise soon. Food manufacturers simply cannot continue to absorb commodity increases.
6. We have a price increase going into effect October 1st, which increases orders for September.
7. For our business, there is a lot of forward looking quotational activity, no new orders, but construction of projects which receive financial approval back in the Spring.
The two main themes are future price inflation and that companies may have cut too many workers during the recession. Despite what the criminals at the Fed claim, consumers can expect to see their cost of living increase (how this can be a sign of deflation is beyond me). The only reason this has not occurred sooner is because businesses have not been able to pass on increased costs due to extremely weak demand. This situation is changing and now companies are more confident they can increase prices. The other trend is that companies may regret firing so many workers. If we see any real increase in final demand, corporations will have to start hiring more people at a rapid rate, which is good for the job market. The major question is if final demand will be there. If history is any guide, demand will remain soft for a protracted period of time following a financial crisis.
Black Swan Insights
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Theirs no end to the dismal economy.
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