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More good news for the economy.

Evidence continues to mount that there is more strength in the economy than some prognosticators were willing to admit just a few months ago. The latest comes from the Steel Service Center Institute (SSCI). Its survey of members shows first-quarter average daily shipments were 4.6 percent ahead Of the fourth quarter of 1989, 1.3 percent ahead of the corresponding period of a year ago, and were even equal to the first quarter 1988 performance, which was very strong.

There's a good chance that shipments this year will at least equal 1989 when they hit 23.7 Million tons, Andrew Sharkey, SSCI president, reported at his association's annual meeting. That optimistic outlook compares, he said, to the November prediction calling for as much as a 3 percent decline.

"Volume and shipment levels are not a problem," he told the group, pointing out that carbon plate, structural, tubing, and bar shipments were all up in the first quarter; alloy steel product shipments were even; and only stainless and carbon flat-rolled product shipments were down.

He pointed out that conditions vary by region. ,The Southeast and Pacific Northwest are relatively strong, while the Northeast and parts of the West Coast are weaker. The Midwest, with the exception of automotive, is generally solid," he said.

pointing to the bad news," Mr Sharkey reported that the survey showed orders for "nondefense and defense capital goods as well as for both manufacturing and consumer durable goods have been weak. Additionally, construction is still plagued by a weak commercial sector and the high cost of money, while automotive, defense, appliance, and general aviation are all looking at declines in 1990.

The "good news" he pointed to included the fact that the first-quarter gross national product (GNP) was stronger than forecast, and mill-shipments forecasts have been upgraded to about equaling last year. In addition, he said, backlogs in most metalworking markets are remaining strong, and farm-equipment shipments are strong.

The SSCI's most recent monthly membership survey May) continued to reflect a quite positive" outlook. There's much greater optimism about the general economy, incoming order rates, profit margins, and replacement costs, Mr Sharkey reported. He indicated that min lead times have lengthened slightly, and steel prices seem to have stabilized; both seen as positive economic factors.

Even the outlook for profit margins, an area that has plagued service centers in recent years, reflected a "positive attitude among SSCI members. Margins have been stabilized, Mr Sharkey said, and the percentage of survey respondents reporting improved margins has gone up each month since December.
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Title Annotation:Steel Service Center Institute survey
Publication:Tooling & Production
Date:Jul 1, 1990
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