Fears over job losses blight hopeful economic outlook

4 June 2003
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05 June 2003 | Robin Parker

US purchasers hold out hope of economic growth later this year but fears are mounting of job losses and trade deficits.

Almost three-quarters of purchasers expect growth in the second half of this year, according to the ISM's twice-yearly Economic Forecast.

But the report predicts around 600,000 job losses this year. The cuts are expected to be particularly prominent in the non-manufacturing sector, which revised its December 2002 forecast of a 0.2 per cent growth in jobs this year to a 0.5 per cent fall.

Presenting the report to the conference, Norbert Ore, chair of the ISM manufacturing business survey committee, and Ralph Kaufmann, chair of the non-manufacturing committee, said labour and benefits costs would grow by more than 2 per cent over the year.

Forecasts for production capacity are half what they were in December, but panel members were confident of an upturn towards the end of 2003.

While exports are expected to remain strong, Ore foresaw trading deficits triggered by a strengthening dollar.

"As we become more productive, we'll find less of a market to sell into because other countries are not balancing the market."

Donald Ratajczak, Regent's professor emeritus of economics at Georgia State University, said the forecast painted a "troubling" picture.

"We lost a percentage point of gross domestic product because of adverse trade balances last year," he told SM.

"As we become more competitive, we need trading partners, particularly in Western Europe, to stimulate their economies."

• The US Department of Commerce is calling upon purchasers to help it improve its supply chain measurement and produce more accurate economic forecasts.

Kathleen Cooper, under-secretary for economic affairs, asked delegates to respond to a questionnaire on changing behaviour in such areas as e-business and outsourcing to help the Economic Census Bureau get a picture of current and future supply management practices.

SMjun2003

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