Metalworking Forecasting Tools
Tools Aerospace Computers & Electronics Construction Machinery Engines, Turbines, & Power
Farm Equipment Machinery Medical Motor Vehciles & Parts Oil Durable Goods
Computers & Electronics
Text Box: Since Americans are better at spending than saving, it makes sense that the real personal income excluding government transfers (think social security, welfare, unemployment benefits, etc.) is a leading indicator of spending on electronics. It's important to note that consumer spending on electronics has been growing for 40 years, even when earnings are contracting. On average, changes in real average hourly earnings leads real video, audio, and computer goods spending by 10 months. Current Comment - Incomes are in a decelerating contraction. Spending on electronics has picked up faster than other forms of spending.
Text Box: It makes sense that consumer spending on video, audio, and computer goods is linked to industrial production of computer and electronic products. The chart below shows that there is a very good correlation between what consumers spend and what manufacturers produce. On average changes in electronics spending leads changes in industrial production of computer and electronic products by 10 months. Current Comment - Spending on electronics is growing faster. Industrial production of computers and electronics products is still contracting but it is doing so more slowly. With the improvement in spending, electronics industrial production should start growing again soon.
`
Text Box: Industrial production of durable goods leads machine tool unit sales. For the computer and electronics industry, it appears that this is the case most of the time. Although, it would be helpful to have more historical data to draw a definitive conclusion. Current Comment - Computer and electronics industrial production has seen accelerating growth for several months. Machine tool sales to this industry have bottomed and should start improving significantly.
Sources
Average Hourly Earnings
Consumer Price Index
Consumer Spending
Industrial Production
Machine Tool Sales (EDA)
For more information contact Steve Kline, Jr., financial analyst.
513-527-8800
skline2@gardnerweb.com
Links to other Financial Data from Gardner Publications, Inc.
2008 Capital Spending Survey and Forecast Results
Metalworking Business Index
2008 Capital Spending Survey and Forecast Demographic Reports 
Current and past surveys conducted by Gardner Research
Gardner Publications, Inc. publishes the following magazines:
Modern Machine Shop
Production Machining
Moldmaking Technology
Automotive Design & Production