“I have a good friend that owns a production machine shop. They produce parts for a variety of industries and are coming off their best quarter in more than 10 years. Much of their product is going to other manufacturers who are shipping overseas. Another friend it trying to find a tool and die shop to produce a part, but literally every shop in the Midwest is booked solid,” my brother Bob wrote in his new blog, late last week. His is mostly a political blog that he hopes to write from the Democratic National Convention as a Republican, calling his blog Republican Reporter. Check it out!
Another good friend, Don Altorfer, pointed out to me that the ADP Small Business Report, which reports on businesses with less than 50 workers, added 61,000 jobs in May even as the BLS showed 49,000 jobs lost nationally in May with the unemployment rate jumping from 5.0% to 5.5% in that report. As alarming as that jump was, most are attributing to some seasonal quirks with young people coming into the labor force. The unemployment rate, which is up 1.1% from its low in 2007 is composed of young people under the age of 24 which is up 2.4 points and those over 25 which is up only 0.4 points. Hmm!
Other economic indicators are also generally positive, especially in the manufacturing sector, where productivity is up 4% and real compensation is up 3.5% when compared to a year ago. Factory orders were up as was the manufacturing index in the latest economic releases. Sure there are industries in trouble, like the airlines, American autos and housing but others are booming in the energy and ag industries.
Intrade, an online site that lets people put their own money down on predictions of actual events, a pretty good indicator, shows a one in three chance of us entering into a recession in 2008. I’m guessing that the average person on the street might be shocked by that information, primarily because the media and presidential candidates have all but convinced them that we are already in one!
As I’ve reported to you in the past, our book of business at Agracel continues to grow and we are in the best of times for industrial expansions. This year we’ve got expansion projects under construction or planned in the following industries: food processing, ag equipment, animal feed, furniture, metal fabrication, machinery, medical equipment, printing and building accessories. None are huge but each will create new jobs and are sure signs that this economy is doing much better than the national media would have you believe. In the 22 year history of Agracel, we in fact, have never been busier.
If this is a recession, I hope that it continues like this into the future.