Well, the experts were stumped again when ISM's Manufacturing Index moved up to 62.8the experts were expecting a decrease. In May 2003, the same ISM index was 50, which indicates a flat economy, though getting to 50 was a big improvement over where it was. Since last May, the ISM index is up 25.6%. Among the highlights of the report was the finding that that employment is growing faster.
ISM's Global Manufacturing report was very upbeat as well.
ISM's Non-manufacturing Index slipped just a little from April but was still a very healthy 65.2, and its employment component was very bullish, near its historic high.
The Business Roundtable of CEOs also reflected strong growth expectations and improved hiring.
Jobless claims went down by 6,000, and the 4-week moving average was up by 5,250 but still in fine shape at 341,000. A full review of the employment situation and new business creation will be included in next week's column.
Factory Orders and Shipments
Okay, let's get the bad news out of the way: April 2004 printing shipments compared to April 2003 were down -$342 million, and are down -2.9% for the first four months of the year. Every time I think we're scraping the bottom, I get surprised on the downside. These data are pretty bad. I'm regularly asked when it will end. I don't know, I tell them. Remember when I first uttered my creepy thought that the economy would turn around without advertising and other print-related sectors? People thought it was just that, a creepy thought. I wish it were.
On the positive side, as a printer, the same report tells you where you should focus your sales efforts. Here's a list of the major industries and their growth rates since the beginning of the year:
Petroleum and coal products +27.9%
Wood products +22.9%
Computers and electronic products +16.0%
Primary metals +15.5%
Textile products +13.1%
Basic chemicals +9.8%
Miscellaneous durable goods +8.7%
Plastics and rubber products +8.6%
Transportation equipment +8.4%
Furniture and related products +8.4%
Fabricated metal products +7.2%
Paper products +6.0%
Nonmetallic mineral products +4.4%
Food products +3.9%
Textile mills +1.6%
Beverage and tobacco products +1.1%
Leather and allied products -5.5%
Productivity and Costs
Productivity was up 3.8%, higher than expected, and the prior quarter was revised up as well. Employment costs were definitely in line and were favorable overall. When productivity is increasing faster than inflation it's a good thing, and it allows workers to be paid more. When productivity lags GDP growth, it means that companies have to hire more workers. Sounds like a good place to be!
Non durable goods which is the part of the economy in which printing is classifiedlost productivity, decreasing by -0.7% from the prior quarter. Non durable manufacturing has lagged for years. The reason is that much of the products in this sector are custom or job shop products, incapable of having a long-term programmed infrastructure like durable goods (cars, equipment, etc.). This is one reason why the incessant focus on print shop floor productivity has not yielded what people expect. There are so many other factors before and after the shop floor that are part of the cost that do not get the same attention. For example, estimators always focus on job costs but never focus on the costs of invoice generation, credit collection, inventory management and other administrative costs. Quality control programs are targeted to production issues, but the concepts are just as applicable to every other task (yes, even marketing and sales). That is, the preoccupation with the cost of goods sold aspect of a print business often neglects administrative and managerial aspects. Productivity measurement is something that should be applied to the whole company, and great printers understand that.
Construction spending set a new record, attributed to the fear of higher interest rates. No one mentions demographics, new business starts, and a desire to invest. I guess those things don't matter to the experts.
For some time, I've wondered about the way "good news" economic data are reported. There are some journalists who think that reporting both sides of a story means that you look for negative things to say, rather than simply reporting facts. I've asked myself, Why aren't the media reporting more positive things about this economy? It's not much different than the economy of 1996, as I discussed in the last WhatTheyThink economic webinar. Some would say its political bias that is driving the negative reporting. I wonder if it's something else.
In the late 1990s, the publishing business was booming and signs of economic strength were obvious to all those who worked for media companies. The Internet, the new toy of that economy, was a bustling exciting beat, with "change the world" stories to report every day. Of course the economy was strong; reporters and editors saw evidence of it in everything they touched. Cover stories about new ways of doing business, things being done in "Internet time," and all kinds of hyperbole were seen on newsstands and in the mails. In cyberspace, content would be king, a concept that made publishers salivate.
Today, however, the publishing business is in a funk. Ad pages are down. Publishers have downsized. Editorial space is shrinking. Salaries and bonuses aren't what they used to be. How can the economy be good when you have all these signs of misery around you? It's no wonder that news of new business formations is met with a feeling that they wouldn't have to start a business if they had been able to keep their jobs? The editors and publishers and managers can't see or feel the environmental vitality in their own businesses, so any news story about growing employment, GDP growth, new businesses, or other "good news," is met with great skepticism. Yet while some think that people who work freelance for publications only do so because they have lost their jobs, I know many freelancers who have worked that way for years. They love their freedom and they most often have done better financially than if they had stayed on staff with a publication or corporation. It's the same with so many corporate jobs that are now outsourced; they often go to former employees, who then add other clients and end up growing a business.
I had started writing this piece about three weeks ago. Then strangely enough, CBS Marketwatch published a commentary containing similar ideas just the other day. We always joke that topics I write about suddenly appear in other venues, but this is the first time it's happened before something is published. Maybe I should check my firewall software again?
Sometimes people are too close to situations to report them accurately, and that may be what's happened to some of the business news reporters. Over the years, I have suggested that people routinely take a weekly "news holiday." (Weekends don't count.) With the media all around us with 24/7 news channels, Internet access, and all of the traditional media, if you miss a day of news, don't worry: it's easier to catch up than ever. A "news holiday" in the office is just as important. Taking a news holiday one day a week helps put things in perspective, unclutters the mind, and allows one to focus without distraction. This is what planning is all aboutgetting away and working in those successive 90 minute blocks of uninterrupted time to actually accomplish things. A critical part of planning should always be getting out of the office and seeking the other side of what your business does. Work a half day at home where you can shut out the office and the world. Work a half day in a quiet library. Visit a customer. Visit their customers. Visit a supplier. Make getting out part of your news holiday. The business news media doesn't always have the luxury of taking one of these holidays, but most others can. A change in perspective can be a wonderful thing. (If you can't get away from the office, something is wrong: work on improving your delegation and collaboration skills, and on developing the talent around you.)
Oh, and by the way, this column is exempt from news holiday restrictions.
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The next Dr. Joe/WhatTheyThink economic webinar is coming up on June 23rd at 2pm Eastern Daylight Time. The event is free and is sponsored by EFI. The signup page can be found at /home/webinar.html
Among the non-economic topics I'll be talking about are
- The print business owner's to do list (imperative things that must be done in the new print economy),
- What drupa's events may mean for GraphExpo, including a discussion about the role of trade shows in the B2B media mix, and
- Some other surprises, as soon as I figure out what they are.
Is there a topic or industry you'd like to have me address? Please send me an e-mail, and we'll consider it for inclusion. If your topic is selected, I'll e-mail you a free PDF of Dr. Joe's Almanac.