Industrial Insight

Interest rates falling for three decades

April 14, 2014
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https://www.project-syndicate.org/commentary/barry-eichengreen-examines-competing-explanations-for-three-decades-of-decline-in-real-interest-rates

….the only explanation still standing is the shift in the composition of activity away from capital-intensive forms of production, like manufacturing, to less capital-intensive activities, like services.

If the disorder has multiple causes, then there should be multiple treatments. There should be tax incentives for firms to hire the long-term unemployed; more public spending on infrastructure, education, and research to compensate for the shortfall in private capital spending; and still higher capital requirements for banks and strengthened regulation of nonbank financial institutions to prevent them from excessive risk-taking.

eichengreen66chart


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Rail traffic up…

April 11, 2014
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Friday, April 11, 2014

North American railroads netted traffic gains in Week 14

For the week ending April 5, U.S. railroads registered 296,039 carloads, up 5.4 percent, and 261,084 intermodal loads, up 12.6 percent compared with volumes from the same week last year, according to the Association of American Railroads.

Total combined traffic climbed 8.7 percent to 557,123 units and nine of 10 carload commodity groups posted gains, led by grain at 16.8 percent and petroleum/petroleum products at 11 percent. Only forest products traffic registered a decline, and a small one at that: 0.7 percent.


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11 April, 2014 02:42

April 11, 2014
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Steel production

April 11, 2014
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Last week steel production fell sharply.


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steel production

April 11, 2014
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Steel production has fallen sharply the past two weeks. It is not clear if this is due to a downturn in demand or is a temporary disruption.


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MAPI forecast

April 7, 2014
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MAPI forecasts manufacturing production growth of 3.2% in 2014, up from the 2.3% rate in 2013. And production growth will continue in 2015, predicts MAPI, to reach 4.0%, down slightly from the organization’s December 2013 forecast of 4.1%.

“Factors that were dragging down growth (mainly tax and other policy issues) were absorbed in 2013 and will not worsen over the next two years,” says MAPI Chief Economist Daniel J. Meckstroth, Ph.D. “Consumer-driven manufacturing growth will be relatively stable and supported by employment gains. Households have low debt burdens and their wealth is rising because of higher stock and home prices.

“Business investment–driven manufacturing is responsible for nearly all of the acceleration in production growth,” Meckstroth notes. “Firms have lots of cash, are profitable, and have relatively high utilization rates. Importantly, the two-year federal budget and debt ceiling agreement substantially reduce uncertainty. Now that the Eurozone has come out of recession and emerging markets seem more resilient, export activity should pick up and provide a boost to business sentiment.”


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Global Steel production

April 3, 2014
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The rate of increase in global steel production will marginally outstrip world economic growth over the next four years, according to a new report by steel analysts MEPS (International) Ltd.


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CAPEX could grow…

April 3, 2014
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http://www.thereformedbroker.com/2014/04/02/the-capex-comeback-still-just-talk/

While management remains cautious on earnings, they are more positive on capex. The 3-month capex guidance ratio was unchanged in March at 1.8, indicating management is guiding above consensus on planned capex nearly two times as much as below. This is above average, and suggests companies may be more willing to deploy excess cash on capital investments this year.

Screen Shot 2014-04-02 at 2.21.03 PM


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weekly steel production down

April 1, 2014
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AISI reported weekly steel production fell. This keeps the steel production in the range of output it has had since early 2013.


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About author

I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.

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