U.K. Services Expand at Slowest Rate in Five Years:
Growth at United Kingdom (U.K.) services companies, from banks to hotels, unexpectedly slowed to the weakest pace in five years in April as the seizure in credit markets choked economic growth. Services index, based on replies from about 700 service companies surveyed, fell to 50.4, the lowest since March 2003, from 52.1 in March, the Chartered Institute of Purchasing and Supply reported today in London.
Lloyds TSB Group Plc, the U.K.'s largest provider of checking accounts, said today that first-quarter profit was held back by asset write downs and slowing insurance sales. Bank of England policy makers, who have cut the main interest rate three times since December to avert a recession, will probably keep it at 5 percent this week as they try to grip inflation.
Bank of England Governor Mervyn King predicted last week that the inflation rate will rise above the government's limit of 3 percent. British law requires him to write a letter of explanation to the government if inflation strays more than 1 percentage point from the central bank's 2 percent target.
In April 2008, average hourly earnings in manufacturing were $17.57, down 0.2 percent from March’s $17.61 (revised), and up 2.2 percent from $17.20 in April 2007.
In the fourth quarter of 2007, the average hourly compensation of all manufacturing workers increased
at an annual rate of 4.4 percent. Durable goods manufacturing and nondurable goods manufacturing posted
gains in hourly compensation of 5.2 percent and 3.0 percent, respectively. When the 5.0 percent
fourth-quarter increase in consumer prices was taken into account, real hourly compensation declined 0.6
percent in total manufacturing, edged up 0.1 percent in durable manufacturing, and fell 1.9 percent in
nondurable manufacturing (seasonally adjusted annual rate).
In 2007, hourly compensation of all manufacturing workers rose 5.4 percent, compared to a 2.8
percent increase in 2006. Hourly compensation increased 5.5 percent in durable manufacturing and
rose 5.1 percent in nondurable goods industries. Real hourly compensation in the manufacturing
sector increased 2.7 percent in 2007 after decreasing 0.5 percent in 2006.
Manufacturing profits in the fourth quarter of 2007 were $280.3 billion, down 5.6 percent or $16.5 billion (at an annual rate) from $296.8 billion in the third quarter.
Manufacturing profits in the fourth quarter of 2007 were up $0.1 billion compared with the fourth quarter profits of 2006. Manufacturing profits in 2007 were up $12.3 billion above manufacturing profits in 2006.
Fourth quarter 2007 profit estimates for all non-financial industries (manufacturing being a subcategory) were down 3.1 percent from the previous quarter of 2007 to $973.4 billion, but up 0.4 percent from the fourth quarter of 2006.
In April 2008, manufacturing employment fell 46,000 to 13.6 million from March’s (revised) manufacturing employment levels. The decline was reported in both durable and non-durable goods industries. Within durable goods, employment continued to decline in industries related to construction, such as Wood Products (-2,100), Furniture and Related Products (-4,100), and Fabricated Metal Products (-11,300). In addition, job losses were reported in Transportation Equipment (-19,000), Machinery (-2,300), Computer and Electronic Products (-1,900) and Miscellaneous Manufacturing (-2,400).
In the non-durable goods sector, job losses were registered in Textile Mills (-2,400), Apparel (-1,300), Plastics and Rubber Products (-1,900), Chemicals (-500), and Petroleum and Coal Products (-500), among others. However, job gains were reported in Food Manufacturing (1,700).
Since April 2007, manufacturing employment has declined by 326,000. Nonetheless, manufacturing employs 13.6 million workers and represents 9.9 percent of total non-farm employment.
In March 2008, manufacturing output edged up 0.1 percent after having dropped 0.5 percent in February. For the first quarter as a whole, manufacturing output decreased at an annual rate of 0.5 percent after having fallen at a similar pace in the fourth quarter.
The production of durable goods decreased 0.1 percent, while the output in non-durable manufacturing increased 0.2 percent.
Excluding motor vehicles and parts, the output of durables advanced 0.7 percent, and gains were widespread across durable goods industries. Increases were reported in several key sector including Wood Products (1.1 percent); Nonmetallic Mineral Products (1.4 percent); Computer and Electronic Products (2.0 percent); and Miscellaneous Manufacturing (1.4 percent).
Among non-durable goods, industries that had notable gains in March were Food, Beverage and Tobacco Products (1.5 percent); Paper (1.6 percent); Printing and Support (0.7 percent); and Chemicals (0.3 percent). These gains outweighed declines in Apparel and Leather, Petroleum and Coal Products, and Plastics and Rubber Products.
The output of non-NAICS industries (publishing and logging) rose 0.7 percent in March but fell 2.6 percent from its year ago level.
In March 2008, manufacturing industries (NAICS based) operated at 78.6 percent of capacity, 0.9 percentage points below their 1972-2007 average of 79.5 percent and 0.1 percentage points less than their revised capacity utilization in February 2008.
In durable manufacturing, capacity utilization decreased 0.3 percentage points in March from February (revised) to 76.7 percent. Capacity utilization edged up in Wood products (0.7 percent); Nonmetallic mineral products (1.0 percent); Fabricated metals products (0.4 percent); Computer and electronic products (0.8 percent); Electrical equipment, appliances and components (0.7 percent); Aerospace and miscellaneous transportation equipment (0.1 percent); Furniture and related products (0.4 percent); and Miscellaneous manufacturing (0.9 percent).
Nonetheless, capacity utilization declined in Primary metal (-2.4 percent); Motor vehicles and parts (-3.9 percent); and Machinery (-0.2 percent).
In March 2008, capacity utilization in non-durable manufacturing rose 0.1 percentage points from February 2008 (revised) to 80.7 percent. Increased capacity utilization was reported in Food, beverage and tobacco Products; Textile and product mills; Paper; Printing and support; and Chemicals. These gains outweighed declines in Apparel and leather; Petroleum and coal products; and Plastics and rubber products.
Manufacturing productivity rose at a seasonally adjusted annual rate of 2.3 percent in the
fourth quarter of 2007, as output declined 1.7 percent and hours of all workers edged down
3.9 percent.
In durable goods industries, productivity increased 4.2 percent as both output and hours
decreased, 0.7 percent and 4.7 percent, respectively. The decline in durable goods hours was
the largest since the third quarter of 2003, when hours fell 6.9 percent. In nondurable goods
industries, output per hour fell 0.5 percent, reflecting decreases of 2.9 percent in output and 2.4
percent in hours. In the third quarter of 2007, productivity increased 4.1 percent in total
manufacturing, 5.4 percent in durable goods industries, and 3.2 percent in nondurable goods
industries, as revised.
In 2007, manufacturing productivity grew at a seasonally adjusted annual rate of 3.7 percent,
reflecting an increase in output of 2.0 percent and a decrease in hours of 1.7 percent. Labor
productivity increased 4.9 percent in durable goods manufacturing during 2007, as output rose
2.9 percent and hours fell 1.9 percent. Productivity in nondurable goods manufacturing
increased 2.2 percent in 2007, reflecting a 0.9 percent increase in output and a 1.2 percent drop
in hours
Strong productivity growth has resulted in the decline in manufacturing employment.
Year to date February 2008, U.S. manufactured goods exports accounted for 58.9 percent of all U.S. exports of goods and services, compared with 59.3 percent a year ago. During that same period, manufactured goods exports were 17.9 percent above year ago levels, while imports were up 7.1 percent. The trade deficit in manufactures improved to $450.0 billion (annual rate) for 2008, down from $510.6 billion a year earlier.
Shipments of manufactured durable goods in March, down four of the last five months, declined $0.8 billion or 0.4 percent to $210.1 billion. This followed a 2.6 percent February decrease.
Transportation equipment, down four of the last five months, had the largest decrease, $1.0 billion or 1.9 percent to $54.1 billion. The next largest percentage decreases were in Computers and electronic products (-1.1 percent) and Machinery (-0.3 percent). However, shipments increased in other durable goods industries; Primary metals (1.6 percent), Fabricated metal products (0.8 percent), and Electrical equipment, appliances and components (0.8 percent).
In March 2008, the Producer Price Index (PPI) for finished goods, except foods and energy, rose 0.2 percent following a 0.5 percent increase in February. The index for finished energy goods advanced 2.9 percent in March after rising 0.8 percent in February.
Partially offsetting the acceleration in finished energy goods prices, the rise in the index for gasoline slowed to 1.3 percent from 2.9 percent in February. Prices for residential natural gas climbed 4.2 percent, advanced less than a month earlier.
Prices for liquefied petroleum gas turned up 4.2 percent in March after declining 9.7 percent in February. Finally, the index for finished consumer goods except foods and energy, increased 0.3 percent in March, compared with a 0.6 percent rise in the previous month.
Institute for Supply Management's (ISM) Index (updated)
In April 2008, the ISM index of manufacturing registered 48.6 percent, unchanged from March’s seasonally adjusted reading. An index above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
Economic activity in the manufacturing sector failed to grow in April as the ISM index fell below 50 percent for the third consecutive month, while the overall economy grew for the 78th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.
The changes in the components of the ISM index in April were: New Orders unchanged, Production up 0.4%, Employment down 3.8%, Supplier Deliveries up 0.4%, and Inventories up 3.2%.
Prepared by
Office of Competition and Economic Analysis
Manufacturing and Services
International Trade Administration
U.S. Department of Commerce
(202) 482-3699
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