EuroWire January 2007

Transat lant ic Cable

pressures are subsiding. The measure was down 26 points in a two-month period, the biggest back-to-back drop since these gauges were instituted in 1948. Another bright spot is that fewer factories are paying more for crude oil, which may make it less likely they will need to raise prices on finished goods. On 20 th October the price of a barrel of crude oil traded on the New York Mercantile Exchange fell to $56.82, the lowest level for the year to that point. In brief . . . Caterpillar Inc , the world’s largest maker of earthmoving equipment, plans to cut some jobs at American factories and build more plants in China and India to counter the expected US economic slowdown that will curtail its sales in the home market in 2007. Chief executive officer James Owens said on 3 rd November that Caterpillar (Peoria, Illinois) faces challenges in the US housing market and in North America on-highway truck engine sales. The company is a bellwether of the US economy because its sales span industries from mining to oil to construction. After Caterpillar on 20 th October predicted weakening sales ahead, the company’s stock took its biggest drop in 19 years. Spotlight on: Nucor Corp Rumors of a Nucor bid for ThyssenKrupp excite the German market On 26 th October, speculation that Nucor Corp, the Charlotte, North Carolina- based steel minimill, would offer to buy ThyssenKrupp AG caused the stock of Germany’s largest steel maker to rise to its highest value in more than six years. ThyssenKrupp shares climbed 6.5%, in trading volume – almost twice the daily average for the year to that point. The shares also gained more than any other stock on Germany’s benchmark DAX index for the day. A Nucor takeover of ThyssenKrupp probably would be the steel industry’s ❈

The economy

Manufacturing slowdown threatens the five-year

economic expansion in the US “We are in a significant slowdown in factory activity,” Richard DeKaser, chief economist at the banking group National City Corp (Cleveland) told Bloomberg News on 1 st November. “The slowdown in overall economic growth is taking a toll on the factory sector, and the reality of somewhat bloated inventories for certain goods is prompting a cutback in production.” The pessimism was prompted by the announcement by the Institute for Supply Management that its factory index for October fell to 51.2, lower than forecast, from September’s 52.9. A reading higher than 50 signals expansion. A measure of prices paid for raw materials dropped to the lowest in more than four years. strong evidence that manufacturing in the US expanded at the slowest pace in more than three years in October. Moreover, the Commerce Department said that construction spending had gone into an unexpected six-month decline because of a deteriorating housing market. Construction had been a steady support to the long-lived economic expansion. The manufacturing institute’s new orders index, which accounts for about one-third of the total index, fell to 52.1, the lowest since May 2005, from 54.2 in September. The production index, a measure of work being performed, dropped to 51.9, the lowest since April 2003, from 56.1 in September. The supplier deliveries gauge, which covers how long it takes companies to receive goods, dropped to 50.2 from 54.1. The October reading was the lowest since June 2003. If manufacturers are imparting not much spark to the economy, they themselves may take comfort in the drop in the ISM index of prices they are paying for raw materials. The index fell to 47 from 61 in September, which suggests that inflation The ISM report provided

Manufacturers of both ‘ HUSH ’ & ‘ LOCK ON ’ PULLING IN DOGS

T: +44 (0)1527 570977 F: 878990 E: locton@spring-tooling.co.uk

www.locton.co.uk

47

EuroWire – January 2007