|Source: Kennesaw State University Econometric Center|
|ATA Trucking Index|
|Growth of Southeastern International Port Shipments|
|Source: U.S. Department of Commerce|
|District-Assembled Vehicle Production Growth 2008–09|
|Source: Automotive News|
Kennesaw State University's Southeast Purchasing Managers Index (PMI), a gauge of regional manufacturing, increased from 46.2 in August to 46.7 in September. The increase was mostly attributed to the strength in production and employment components, up 3.5 and 5.8 index points, respectively. (A PMI over 50 indicates expanding manufacturing activity, a PMI below 50 indicates contracting activity, and a reading of exactly 50 indicates no expansion or contraction.)
Trucking and Railway
Recent indicators suggest that on a year-over-year basis, freight demand remained weak but declined less than in previous months. According to the American Trucking Associations (ATA), truck tonnage levels declined 8.0 percent in August from a year earlier, the smallest year-over-year decline since December 2008. Meanwhile, Cass Information Systems, a major U.S. processor of payment transactions for freight companies, reported that their September volume-of-shipments index fell 10.6 percent from a year earlier, a less dramatic drop than the 16.6 percent plunge reported in August.
The Association of American Railroads reported that through early October, total rail carloads and intermodal shipments were down 16 percent from 2008 levels. With the exception of automotive shipments, most industry volumes continued to post double-digit declines.
According to U.S. Department of Commerce data, the value of international shipments passing though District ports continued to deteriorate for the 12-month period ending August 2009. Regional imports fell 24 percent, a faster pace than July's 19 percent decline. All regional ports reflected widespread weakening in demand for imported goods. Imports declined most for petroleum, vehicles, and capital goods. Exports also declined, dropping 10 percent from a year earlier. Export values declined the most at ports in Tampa, Savannah, and New Orleans. The decline was led by lower shipments of autos, chemicals, and industrial goods.
The Energy Information Administration (EIA) reported that Gulf Coast crude inventories have picked up slightly since early September, increasing by 9.4 million barrels through the first week of October. Crude stocks remain above their average range for this time of year. Gulf Coast gasoline inventories were down 1.5 percent over the eight weeks ending October 9, though they remain well above their seasonal average.
Production and Refining
According to the EIA's short-term outlook, national crude oil production is expected to average 5.24 million barrels per day in 2009 and increase 1 percent in 2010, with output from several new production platforms in the Gulf of Mexico coming online. District states produced an average 1.5 million barrels of crude oil per day through October 9, compared to 1.3 million barrels per day last year.
Gulf Coast refineries operated at 84.6 percent of their operable capacity in July, down roughly 2 percentage points from June and 8 percentage points from year-earlier levels.
District-assembled vehicle production through mid-September declined 43.4 percent from a year earlier. On a national level, production declined by 42.9 percent.
Industry contacts expect some production increases in coming months in response to low vehicle inventory levels and deliveries of vehicles back-ordered during the Car Allowance Rebate System program. The District's production capacity is currently around 2.2 million vehicle units, according to The Monthly Autocast, a forecasting publication for the automotive industry. However, the District's utilization rates, defined as the ratio of production volumes to plants' auto assembly capacity, dropped to 40.5 percent through the first nine months of 2009. The utilization rate was 69.3 percent a year earlier.
The short-term outlook for regional vehicle production is positive. By early 2010, KIA Motors, a subsidiary of Hyundai, is expected to start assembling its Sorento crossover at its plant in West Point, Ga., with a projected annual production of about 100,000 vehicles in the first year. Beyond next year, the region's production capacity will be enhanced by another 300,000 vehicles coming from Volkswagen in 2011 and Toyota in 2012.