Economic Outlook

-- Converting Magazine, 11/1/2000

Manufacturers' nondurable shipments rose 0.9% between July and August, following a 0.7% decline the month before. New orders for nondurable goods increased 0.9% , more than making up for the decline a month earlier. The estimated value of August 00 nondurable shipments was 7.0% above August 99, while the over-the-year gain in orders was a weaker 6.1%. Thus far in 2000, the value of nondurable shipments is 8.7% ahead of January-August 99, while orders are growing at an 8.5% annual clip. The numbers suggest that with the economy slowing and manufacturers' pricing power still fairly weak, we've seen the peak in nondurable growth this year. This year's numbers remain well ahead of 99. Growth should moderate over the next six months, but then begin to accelerate again by mid-2001.

Converting's exclusive packaged goods price index (PGPI) declined 0.3% between Aug. and Sept. Average prices for 9 of 16 components PGPI fell, 5 increased and two were flat. Household appliances dropped 1.0%, while indexes for cooking oils and processed fruits and vegetables declined by 0.6% and 0.4%, respectively. Between Sept. 99 and Sept. 00, average prices increased for 13 of the 16 PGPI components. The overall PGPI rose 2.1% over that twelve-month period. Over-the-year price increases are largest for soft drinks (+4.6%), floor coverings (+2.6%), and bakery products (+2.6%), while the sharpest price declines are in the cooking oils (-6.6%) and household appliances (-2.3%). Over-the-year gains in PGPI should continue to ease over Q4 2000 and into early 2001 as the economy slows.