Although total new orders increased only 0.1% to 60.6, export orders jumped a surprising 5.0% from September to 57.0 on ISM’s index scale. This shows the resiliency of the US economy and bodes well for logistics and transportation providers perhaps into first quarter 2014. It is also the highest reading since April 2012. The top industries reporting growth are Wood Products; Fabricated Metal Products and Food, Beverage and Tobacco Products.
Inventories increased as well for the month of October however, it was noted that customers’ inventories continued to remain too low. This may indicate companies have adopted leaner supply chains and have implemented IT solutions to forecast orders more accurately.
It appears the global economy is beginning to pick up which is positive news for logistics and transportation providers. Europe’s economy is on the mend and will perhaps be a major recipient of US exports in the next few months. Although US exports to the European Union are down 3.9% year-to-date, July and August export data (latest available) indicate a slight uptick. Combined, US exports are up 1.5% for this period (According to US Government data).
Airfreight may see an uptick not only due to the upcoming holiday season but perhaps even afterwards. Also, rail intermodal services which are up 4.3% for this year already will continue to see increases as manufacturers utilize this service to move products to ports.
A hint of caution remains in the air as a final solution for the US government budget and debt ceiling remains elusive and another stand-off may occur in January and again early February. This may disrupt a still fragile US economy as well as a recovering global economy.