U.S. manufacturing activity in April posted its best showing since September, when the financial crisis erupted. The performance was driven by a rise in new orders reflecting higher business and consumer spending.
The strength in forward-pointing new orders was especially encouraging. It indicated that after slashing inventories in the first quarter, manufacturers see the need to place new orders for other businesses and consumers.
More orders signal that higher consumer spending – which accounts for about 70 percent of economic activity – is causing businesses to boost demand. Such spending is crucial to an economic recovery.
The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index rose to 40.1 in April from 36.3 in March. While anything below 50 indicates manufacturing is contracting, 40.1 was the highest level since September.
Experts cautioned that manufacturers, particularly in the auto industry, still face serious troubles. And the overall economy, as measured by the gross domestic product, contracted at a 6.1 percent rate in the first three months of this year after a 6.3 percent fall in the fourth quarter, the worst back-to-back readings in a half century.
Shareholders meeting a huge draw
The past year’s economic turmoil will provide plenty to talk about at this weekend’s Berkshire Hathaway Inc. shareholders meeting.
More than 30,000 people are expected in Omaha today to listen to the company’s top two executives, Warren Buffett and Charlie Munger, answer questions about the recession and Berkshire’s results.
Shareholders will also vote on a proposal that would require the company to produce a sustainability report.
Berkshire’s Class A stock lost 32 percent in 2008, and Berkshire’s book value – assets minus liabilities – declined 9.6 percent, to $70,530 per share. That was the biggest drop in book value under Buffett and only the second time book value declined.
But despite Berkshire’s rough year, the company still outpaced the market index Buffett uses as a measuring stick. The S&P 500 fell 37 percent in 2008.
Clearwater Paper earnings rise
Clearwater Paper Corp., the pulp-based manufacturing spinoff from Potlatch Corp., reported first quarter earnings of $13.6 million, compared to $2.2 million in earnings during the first quarter of 2008.
The company’s consumer products segment, which makes toilet paper and other tissue products, had a strong first quarter as a result of higher selling prices and favorable pulp, freight and energy costs.
The results were partially offset by lower earnings from the pulp and paperboard segment and a loss from the wood products segment. Lumber prices fell by 21 percent during the quarter compared to a year earlier. Shipments were down 31 percent as a result of weak demand.
sponsored According to two 2015 surveys, 62 percent of Americans do not have enough savings to handle an unexpected emergency, much less any long-term plans.