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» ECRI - Industrial weakness could derail economy

Industrial weakness could derail economy
Research firm says business spending cool down could put brakes on growth in the second half of 2006.

March 1, 2006: 2:28 PM EST

NEW YORK (Reuters) - The industrial sector could prove an unexpected source of weakness for the economy, and one that risks much slower growth in the second half of the year than is currently expected, according to a new report.

Most economists are predicting a gradual easing of economic growth this year as a housing slowdown makes consumers feel a bit queasier about extending their recent spending spree.

But the Economic Cycle Research Institute, an independent research firm that produces and tracks a cross-section of indicators, says those looking for business investment to pick up the slack from consumers could be in for a rude awakening.

"An industrial slowdown could come when consumer spending growth is already slowing, resulting in much weaker overall growth than generally anticipated this year," said Lakshman Achuthan, ECRI managing director.

The latest figures from the Institute for Supply Management showed a pick up in national manufacturing activity, with its index rising to 56.7 in February from 54.8 in January.

But ECRI argues that may be more of a last gasp for manufacturing in the current economic cycle then the start of a sustainable upward trend in activity.

"The not-too-hot, not-too-cold 'Goldilocks' economy envisaged by many economists could turn out to be a mirage," said Achuthan.

ECRI has come to that conclusion by monitoring a number of its leading indicators, which it says have accurately predicted fluctuations in manufacturing in the past.

The firm has also been watching recent declines in prices of commodities like industrial metals, which also tend to presage slower industrial activity.

"The correction in metals prices appears to be in line with earlier signals of a cyclical slowdown in the industrial sector, and may thus be the early stage of a cyclical downswing rather than just 'noise,'" Achuthan said.

Note: the story headline is not mine, but the quotes are accurate.

-- posted by ECRI

» ECRI - Weekly Leading Index Down

NEW YORK, March 3 (Reuters) - A gauge of future U.S. economic growth edged down in the latest week due to a weaker housing market, lower commodity prices and higher weekly jobless claims, a report said on Friday.

The Economic Cycle Research Institute, an independent forecasting group, said its weekly leading index edged down to 137.2 in the week to Feb. 24 from 137.4 the prior week.

"Despite the three-week pullback in WLI growth, the U.S. economic growth outlook remains reasonably favorable for now." said Lakshman Achuthan, managing director at ECRI.

The index's annualized growth rate fell to 3.5 percent compared with 4.1 percent in the prior week.

-- posted by ECRI

» ECRI - March 10th TV

Hi All, Wanted to let any early-risers know that I'll be on Bloomberg TV tomorrow at 7:10 AM (ET) and then later on I'll be on CNBC around 11:20 AM (ET). The early show will be a challenge as I've got my 40th birthday dinner tonight! Good news - I think Ted David will be the anchor on CNBC tomorrow. Kind regards, Lakshman

-- posted by ECRI