Tuesday, December 2, 2008

Autos and Manufacturing

The Lehmann Letter ©

The Big Three are testifying before Congress again, trying to make their case for a bailout. Maybe they’ll succeed.

But there is something everyone can agree on: The automobile industry and all manufacturing are in trouble.

November new-vehicle sales were 10.1 million at a seasonally-adjusted annual rate. See where that is on the chart below. Is there any wonder that the industry is in crisis?

New-Vehicle Sales

(Click on chart to enlarge)

Recessions shaded

Yesterday the Institute for Supply Management said the Purchasing Managers’ Index fell to 36.2 in November (http://www.ism.ws/ ). In the chart below you need to go back to 1980 for a lower reading. The auto industry is a reflection of what is happening throughout manufacturing. Or vice versa.

Purchasing Managers’ Index

(Click on chart to enlarge)

Recessions shaded

In a couple of weeks the Fed will release its industrial production and capacity-utilization data. We’ll see if they, too, confirm these grim trends.

(The charts are taken from http://www.beyourowneconomist.com. [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)

© 2008 Michael B. Lehmann

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