Industrial Activity - March 2010


Kennesaw State University's Southeast Purchasing Managers Index (PMI) increased from 45.8 in December to 56.8 in February. (A reading above 50 indicates expanding manufacturing activity; below 50, contracting activity; and exactly 50, no expansion or contraction.) The 11 index point increase was attributed to broad gains in most components. The new orders component gained 10.8 index points to reach 65.1 while the production component experienced a sharp increase of 13.6 index points, to 60.5. The overall index was also boosted from a 17.9 index point jump in the finished inventory component. For the first time in several months, the employment component indicated growth by reaching 53.3, the result of an 11.9 index point gain.

Transportation and Trade

Trucking and Railway
Freight indicators continued to improve in February. According to the American Trucking Associations (ATA), truck tonnage levels increased 2.6 percent from 2009, the third consecutive year-over-year gain. However, the Cass Volume Freight Index (obtained by a broader base of shipping companies) was down in February from previous gains reported in December and January. Cass data suggest that although freight demand is improving, recovery in the sector is not conclusive.

The Association of American Railroads reported that rail shipments through mid-March were up sharply for automotive, chemical, and other industrial shipments. Coal shipments continued to be weak, partially offsetting the gains reported in other sectors.

International Trade
According to U.S. Department of Commerce data, the value of international shipments passing though District ports in January continued to decline but at a slower pace. Regional imports fell 27 percent year over year while exports dropped 12.6 percent. All regional ports experienced declines in imports, while Tampa, New Orleans, and Mobile saw the biggest decline in 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 30 million barrels over the 13 weeks ending March 19. Crude stocks are near the top of their average range for this time of year, roughly tracking a typical seasonal pattern in which inventories begin to rebuild toward the beginning of the calendar year. Gulf Coast gasoline inventories remain above their seasonal average, despite a decline of 5.1 percent since the beginning of February.

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 3.9 percent in 2010. District states produced an average of 1.5 million barrels of crude oil per day since the beginning of 2010, up 15 percent from the same period in 2009, when crude prices were at record lows.

Gulf Coast refineries operated at 83 percent of their operable capacity in December, down 0.7 percentage point from November and 1.7 percentage points year over year.

Automobile Production

Through mid-March, District vehicle production was up sharply from low levels in 2009, but production was still far below levels seen in 2008.

Despite a pickup in sales of some vehicle segments, some contacts have noted that automakers are reluctant to hike production until retail vehicle sales improve. Fleet and leasing sales are driving the recent pickup in vehicle sales and production.