This page has been archived and commenting is disabled.
"There Are Obvious Signs Of Distress" In The Manufacturing Industry
In April, we noted the NACM's comments that "there are big, big problems" underlying the economy as a surge in unfavorable factors suggested credit conditions were tightening dramatically (only to see that data revised away suddenly). June's data has confirmed this weakness with credit rejections soaring to their highest since 2009 with the biggest spike in 9 years, with NACM CEO Kuehl exclaiming, "There are some obvious signs of distress in the manufacturing community, as the expected wave of consumer demand has yet to manifest... companies that have been awaiting it are getting in trouble with their creditors."
As NACM reports,
“This has been a tale of two directions,” Kuehl noted. “On the one hand, there is some hope for better numbers in the future as the favorables look better than in a long while. However, the present is not so positive, as the unfavorables are worsening, which signals that many companies are not in the shape they would like to be and are falling behind in their obligations.”
5 of the 6 unfavorable factors for Credit Managers weakened dramatically...
Among the unfavorable factors in NACM's credit index, "Rejections" have soared...
The bad news came with the index of unfavorable factors...
The overall reading dove from 51.4 to 49.2, a point not seen in more than a year and a dubious trip into contraction territory for the first time since September’s 49.9.
The sub-readings illustrate the problem. The category of “rejections of credit applications” slid into the contraction at 49.5. That is a dramatic and alarming trend that suggests some in the new applicants pool are far from creditworthy. The category of “accounts placed for collection” traveled a similar path, from 51.6 to 48.3—it’s the first time in the contraction zone in more than three years for the category. “There are some obvious signs of distress in the manufacturing community, as the expected wave of consumer demand has yet to manifest,” Kuehl said. “As such, companies that have been awaiting it are getting in trouble with their creditors.”
And for those who still believe 2015 is on its way to escape velocity (because why else would The Fed think about raising rates)... it's not!
“The year-over-year trend is not encouraging,” Kuehl said. “There has been a distinct downward slide, and it is apparent that conditions were far better in mid-2014 than they are now. That was neither expected nor wanted at this stage of a recovery.”
As Kuehl concludes, rather ominously,
“The overall sense is that the long-delayed recovery has been taking its toll, as businesses are finding it harder and harder to struggle on."
As we noted previously, despite all the IPO fanfare and claims of liquidity styill flowing, the big news is access to credit. It is suddenly very hard to get and this looks like the situation that existed at the start of the recession in 2008. The overall economy didn’t look all that bad in late 2008, except that there was a dearth of credit and that soon led to business failures and struggles.
The pattern is the same whether one is discussing the manufacturing or service side—too many seeking credit that are not going to get what they are seeking—either because there are doubts as to their credit status or because those issuing credit are in a very cautious mood.
»
- 12468 reads
- Printer-friendly version
- Send to friend
- advertisements -
who cares, manufacturing is so like Pre-NAFTA... get some training and change old folks diapers that's where the $ are now or learn to day trade like that playboy slut
Hold on, hang tough, be exceptional. The consumer driven recovery is right here, alongside the green shoots in the Central Valley.
Clinton/Biden whenever
You're shooting greens in the Central Valley?
Why didn't I get an invite?
(Holding out for Bernie Sanders. Why settle for an ersatz Commie?)
… in other words, there were US Manufacturers STUPID ENOUGH to BELIEVE the Obama/Yellen Economic Rocket was really gonna lift-off this time??
Bankruptcy is too good for them !
Hey Knuks, I'm not asking you to fall of the wagon, but a shot of "caugh syrup" does wonders. (quit robbing Peter to pay Paul)
?
If youn think NAM CEO Kuehl is negative now, wait until he finds out he is being fired, replaced by some out-of-work Senator.
SINCE LEHMAN !!!!
YEah . . . most of it is in CHINA now.
Tiny Bubbles. /s
As stated before... The PBoC has maybe 2.8-3.2 in $usd denominated f/x reserves. Outflows are 2-3 years and growing.
https://www.youtube.com/watch?v=mlCiDEXuxxA
Thanks for the link.
:-D
Probably has to do with McDonalds and the re classification of fast food workers as the "manufacturing sector".
In 2015 the USA is a manufacturing powerhouse...of McBurgers.
Duh, started many moons ago. As Ross Perot said twenty three years ago..."That Giant sucking sound"..
Now lets bring on TPP and finish the JOB...good lord..
I was at an auction last week, and they couldn't get a $5 bid on a low boy (massive trailer, used to haul heavy equipment).
The tires alone should have been worth a couple of thousand, but no one had the room, time, inclination, to deal with the thing. From what I saw in Florida last year, there are billions of dollars of construction equipment sitting and rusting.
been there Kaiser. In 09 went to many machine tool auctions and the auctioneers couldn't get 10% bid on brand new equipment. with noting to put on a low boy (or a milling machne), they are worthless. some of those machines are still sitting in warehouses.
A temporary blip. Obozo says the economy is rip roaring along. The FED and the BLS told him so.
He also said what happened in greece stays in greece...I thought only las vegas did that?
MSM has to just keep the narrative Pollyana-style till the appointment of hrc. Then watch the spin.
I've had more calls from clients in the past month asking if things are turning down than any time since Sept-Nov. '08 (I'm in the tech industry.)
My answer is no, you're not alone, and yes, indeed things are looking bleaker.
You can't plan with the economy whipsawing around.
Thank dog I got out of manufacturing in the 1980's.My rates(property taxes)
were 100k pounds per year before I made squat.
Lots of sleepness nights came at no extra cost.
"You can't plan with the economy whipsawing around."
Oh man, you have no idea how true that is, and how much I hear this from my clients (most of which are Fortune 500s that do real manufacturing in tech, e.g. have billions invested in plants.)
I've said this before -- for a lot of companies, the reason for the stock buybacks is not to fuck with their P/E ratio with accounting tricks, it's because no sane planner is going to sink billions into new plant and capital equipment when there's no fucking market to sell new, real products into. The buybacks/dividends are an admission that the best use of profits is to give it back to shareholders -- which is a no-confidence vote in recovery or growth on a timeline that measures 3-5 years.
So the new normal is... any upside in demand is met with shortages. Manufacturers can't risk investments in additional capacity with thin margins and end markets that turn off in an instant. On top of this you have insane inventory games on both ends of the supply chains (both inputs and finished goods) that hide inflection points from discovery until it's too late to alter a build plan.
This where where JIT delivery bites us in the arse as a civilizatiom.
Entropy is a vicious bitch.
Fellas you're over thinking things... The buybacks are are coming home to roost.
Always do Yen.
Seen it many times, its like groundhog day.
Without interest, in this managed capitalism , is going to make the ending much more interesting.
Still the same ending though.
My Mother is extremely Cantankerous.
… has she tried Listerine ?
When the traffic begins thin down (from layoffs) here in the Santa Clara Valley, you'll know it's game time. Haven't seen it as yet, but that don't mean it isn't a hair-trigger pull away.
I'm going to vote for Hillary Clinton or Barak Hussein Obama (a black Muslim) and they'll get the economy going again.
I didnt even know we HAD a manufacturing industry!! :-)
Are they talking the ones that make the hamburgers and fries?
I dont get this article at all :-)
There's manufacturing in the USA, it's owned by foreign corporations.
The US manufactures debt, mostly.
I gotta say it again. Pisses me off to no end. I own 3 apartment building worth well over a million each free and clear and always full. I would be by most anyone's standard be considered well off with a 7%. debt to asset ratio overall. I know I couldnt borrow a thin dime from any bank in town. The big banks and the Feds have shut the banks down to anyone who doesnt fit a very narrow parameter of lending requirements. The local banks cant spit without the auditors looking up their a--es. That is what is going to be the end of us all. Well, most of us. I don't really need the prix.
Tyler Durden wrote:
WTF!?!?
That remark is probably one of the most patently false statements that I have ever read here on ZH. In late 2008 and early 2009, employers were laying off about 850K employees per month!
Come on, Tyler!!
-- Paul Bain
paulbain@PObox.com
no one asked for your email address douchebag...
"...as the expected wave of consumer demand has yet to manifest... companies that have been awaiting it are getting in trouble with their creditors." Well. How about that? Let me guess what TV stations these "awaiting company's" CEO's tune into for their financial news and forecasts...