US. Manufacturing: No Growth Or Growth For 2007?
Today's ISM numbers show there are some stable signs for manufacturing in the U.S. But is this just a blip or can the sector keep getting strong in 2007? That question was posed to two guests on "Morning Call." Joel Naroff is chief economist at Commerce Bank. He thinks it won't. Anthony Chan is from JP Morgan Private Client Services. He thinks there are some good days ahead for manufacturing.
Naroff says that he sees no room for growth in U.S. manufacturing--basically because of housing. He says home owners are not using equity in their homes to re-design their houses like in the past. He also says he expects business investment to be down in 2007--at least through the first half of the year.
Chan sees a rosier picture because he sees new orders surging for businesses. He also says inventories are going down and he expects residential construction to increase. He said he also expected a cut in interest rates by the Fed--if the unemployment picture remains about the same.
As for having the U.S. manufacturing picture over all (with the idea of having the U.S. make more things) Chan said labor costs make it too tough to compete with the likes of China and other countries that have cheap labor. He says that American manufactures are pretty much at their "leanest" in terms of production.