Industrial Activity - January 2010
Kennesaw State University's Southeast Purchasing Managers Index (PMI), a gauge of regional manufacturing, decreased from 47.5 in November to 45.2 in December. The decrease was mostly attributed to significant weakness in the new orders and production components, down 9.5 and 10.7 index points, respectively. (A reading above 50 indicates expanding manufacturing activity; below 50, contracting activity; and exactly 50, no expansion or contraction.)
Transportation and Trade
Trucking and Railway
Freight indicators continued to improve in December. According to the American Trucking Associations (ATA), truck tonnage levels jumped 6.6 percent in December, the first gain since September 2008. Meanwhile, Cass Information Systems, a major U.S. processor of payment transactions for freight companies, also reported the first year-over-year gain since December 2007.
Despite these improved readings, industry economists cautioned that much of the recent pickup in freight has been driven by inventory effects and that business activity should moderate in 2010, keeping a lid on tonnage growth.
The Association of American Railroads reported that rail shipments in December were off slightly from a year earlier. Coal shipments continued to offset steady gains reported by several key manufacturing sectors such as motor vehicles and parts, chemicals, and metals.
According to U.S. Department of Commerce data, the value of international shipments passing though District ports continued to decline but at a slower pace than earlier in the year. Regional imports in November fell 31 percent on a year-over-year basis after a 32 percent drop in October. All regional ports experienced widespread weakening in demand for imported goods. Imports declined the most for petroleum, vehicles, and capital goods. Exports declined 16.5 percent from a year earlier. The biggest decline in exports was seen in Tampa, New Orleans, and Mobile, led by lower shipments of steel, autos, chemicals, and industrial goods.
The Energy Information Administration (EIA) reported that Gulf Coast crude inventories have increased since mid-December, rising by 11.1 million barrels over the four weeks ending January 15. Crude stocks are near the middle of their average range for this time of year, roughly tracking a typical seasonal pattern in which inventories begin to rebuild around January. Gulf Coast gasoline inventories are up 4.4 percent since early November and remain above their seasonal average.
Production and Refining
According to the EIA's short-term outlook, national crude oil production averaged 5.31 million barrels per day in 2009 and is expected to increase to 5.45 million barrels per day in 2010. District states produced an average of 1.5 million barrels of crude oil per day during the nine weeks ending January 15, up 23 percent from the same period last year, when crude prices were at record lows.
Gulf Coast refineries operated at 82.9 percent of their operable capacity in October, down 3 percentage points from September and up 0.3 percentage point from year-earlier levels.
According to MonthlyAutocast.com, national and Southeastern plants' utilization rates, defined as the share of vehicle production volumes to the plants' capacity, dropped to 42 percent in early 2009. By the fourth quarter of 2009, however, utilization rates climbed to more than 60 percent as most automakers rebuilt vehicle inventories depleted by the "cash for clunkers" program. Industry contacts expect capacity to improve in 2010 as companies continue to rebuild inventories.
The near-term outlook for vehicle production continued to improve. Automotive News recently reported that Mercedes Benz USA will produce its C-class sedans at its plant in Vance, Ala., with expected production starting in 2014. And Kia Motors, a subsidiary of Hyundai, started production of its Sorento crossover at its West Point, Ga., plant with an annual estimated production of 100,000 vehicles by late 2010.
- ATA Trucking Index
- Data Sources
- Growth of Southeastern International Port Shipments
- Gulf Coast and National Refinery Utilization
- Gulf Coast Crude Oil Inventories
- Regional-Assembled Vehicle Production
- Southeast PMI
ATA Trucking IndexSource: ATA data: ind_activity_0110b.xls chart: ind_activity_0110b.jpg
Growth of Southeastern International Port ShipmentsSource: U.S. Department of Commerce data: ind_activity_0110c.xls chart: ind_activity_0110c.jpg
Gulf Coast and National Refinery UtilizationSource: U.S. Department of Energy data: ind_activity_0110e.xls chart: ind_activity_0110e.jpg
Gulf Coast Crude Oil InventoriesSource: U.S. Department of Energy data: ind_activity_0110d.xls chart: ind_activity_0110d.jpg
Regional-Assembled Vehicle ProductionSource: Automotive News data: ind_activity_0110g.xls chart: ind_activity_0110g.jpg
Southeast PMISource: Kennesaw State University Econometric Center data: ind_activity_0110a.xls chart: ind_activity_0110a.jpg showOnHome