Industrial Activity - April 2010


Kennesaw State University's Southeast Purchasing Managers Index (PMI) increased from 56.8 in February to 59.9 in March. (A reading above 50 indicates expanding manufacturing activity; below 50, contracting activity; and exactly 50, no expansion or contraction.) The 3.1 point increase was attributed to continued gains in production, employment, and new orders. The new orders component gained 2 index points to reach 67.1, while the production component experienced another sharp monthly increase of 9.5 index points to reach 70.0.

Transportation and Trade

Trucking and Railway
Freight indicators continued to improve in March. According to the Cass Volume Freight Index (obtained by a broader base of shipping companies), freight volume levels increased 7.6 percent ahead of March 2009. Cass data suggest that although freight demand is improving from last year's low levels, the sector's recovery is not conclusive. The American Trucking Associations (ATA) truck tonnage index for March jumped 7.5 percent over March 2009, the fourth consecutive positive year-to-year comparison. ATA economists added that although demand and supply situations are steadily improving, making up ground lost during the recession will take some time.

The Association of American Railroads reported that rail shipments through early April were up 16 percent from a weak pace in early 2009. Metals shipments led growth in carload numbers, while the pace of motor vehicles and chemicals moderated from previous weeks. Despite some volatility of construction-related shipments, their recent pace is still showing the upward trend reported in earlier weeks.

International Trade
According to U.S. Department of Commerce data, the value of international shipments passing though District ports in early 2010 continued to decline but at a slower pace than in late 2009. Through the year ending February 2010, regional imports fell 23.4 percent from comparable year-earlier levels, while exports dropped 10.5 percent. All regional ports experienced declines in trade, with Mobile, New Orleans, and Tampa posting the biggest declines in imports and exports.

Energy Production

The U.S. Energy Information Administration (EIA) reported that Gulf Coast crude oil inventories have continued to increase from their seasonal low in mid-December, rising by 33 million barrels over the 17 weeks ending April 16. Despite a 2 percent decline in the first two weeks of April, crude stocks are near the top of their average range for this time of year. Gulf Coast gasoline inventories remain above their seasonal average, hovering above 72 million barrels for the past several weeks.

Production and Refining
According to the EIA's short-term outlook, national crude oil production averaged 5.32 million barrels per day in 2009 and is expected to increase 3.8 percent in 2010. District states produced an average of 1.5 million barrels of crude oil per day since the beginning of 2010, up 11 percent from the same period in 2009, when crude prices were at record lows.

Gulf Coast refineries operated at 78.5 percent of their operable capacity in January, down 4.5 percentage points from December and 3.1 percentage points year over year.

Automobile Production

Through mid-April, District vehicle production was up sharply from low readings reported in 2009, but production was still far below levels reported in 2008. Gains in production are still uneven across manufacturers and vehicle segments. About two-thirds of the increase in vehicle assemblies in March came from Toyota, Ford, and GM, companies that benefitted from a strong consumer response to their incentive programs. According to industry contacts, most automakers are still careful to set production plans ahead of demand levels. March's inventory levels are about seventeen days below the historical norm for this time of year.

Regarding idled or suspended regional assembly plants, the near term is still uncertain. GM has decided not to reopen its Springhill Tennessee facility.