Category: Blog

Survey Finds Higher Optimism In Manufacturing, Service Sectors.

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CNBC (3/28, Gewirtz) reported, “In another sign the American economy is on the comeback trail, a new survey from KPMG shows optimism is improving among US manufacturing and service industry executives.” The survey found that “68 percent of manufacturing executives believe business activity will be higher in the next 12 months,” a gain of 11 percent from October of last year. And “41 percent of those same executives say they plan to hire more in the weeks and months ahead,” up from 28 percent in the same time period.

The Ecommerce Journal (3/29) reports, “In terms of revenue 65% of manufacturers surveyed by KPMG expect revenues to rise in the next year. ‘American manufacturing is on the rise because companies are rebalancing, and it is pretty clear demand is picking up nationwide,’ said Lynne Doughtie, KPMG’s National Managing Partner for Advisory Services.”

Manufacturing Economic Activity At Highest Level Since 2004. The Boston Business Journal (3/28) reported in its “BBJ Morning Buzz” blog, “The manufacturing sector singularly contracted over the past several decades,” a contraction that was hastened by the recession. But now “a number of area manufacturing firms are sporting some new faces on their floors as the sector undergoes something of a recovery.” According to a recent article in the Sun Chronicle, “The Manufacturing Institute for Supply Management reported that nationally, economic activity in the manufacturing sector grew in February for the 19th consecutive month and reached its highest level since May 2004.”

From SME Daily Executive Briefing 3/29/2011

Local Manufacturing Seen As Successful Model For US.

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In an opinion article on the New York Times (3/28) website, Allison Arieff writes that in contrast to the image of decline people often associate with manufacturing in the US, “there are many parts of this country where manufacturing is very much alive, albeit in a different form.” Arieff focuses on the work being done by San Francisco’s SFMade and New York’s Made in NYC, “geographic ingredient branding” groups which “are increasingly able to share success stories of how manufacturing has developed new models for doing business in the 21st century.” Part of these companies’ success stems from a growing consumer desire to get locally produced goods, as have “growing consumer demand for greener, more ethically produced products, along with skyrocketing unemployment and nervousness about globalization.” Arieff argues that it is “time to rethink, and indeed rebrand, American manufacturing.”

From SME Daily Executive Briefing 3/28/2011

Meet Hephaestus: the original “Man of Steel”

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Back in the bad old days of Greek mythology, Hephaestus was the name of the god of fire, in particular the fire of the blacksmith. This made him the patron of all craftsmen, as well as the god of volcanoes.

In terms of his personality, Hephaestus is an interesting study in contrasts. By many accounts, he was a jealous lover and gained his wives not through charm but through guile and cunning. Other accounts describe him as a gentle, sensitive “peacemaker” type. By all accounts, he was not considered to be a “hottie”. Additionally, he was the only Greek god to have a physical disability: he had clubfeet that faced backwards. For this reason, he was rejected by his mother, Hera, who threw him into the ocean in the first documented case of postpartum depression. Luckily, he was rescued by the Nereids, who took care of him for nine years in their caves and kept him from further harm from his mother.

During this time, Hephaestus started tinkering with metal, making jewelry from bits and pieces of metal and coral that he found underwater. Because they didn’t have wheelchairs back then, he also built two golden robots to help him move around. This engineering feat was followed by his building of the twelve thrones of Olympus. By now he was in need of assistants, so he hired a crew of eager one-eyed goonies known as the Cyclops, who helped him create beautiful decorative iron and jewelry for his surrogate mothers.

It wasn’t long before his birth mother Hera caught wind of the beautiful jewelry that her contemporaries (female goddess-types) were wearing. Never to be left out of a trend, she enquired as to the maker of the jewelry and learned that it was her own son, at which point she decided that the physical beauty he lacked was compensated by the beauty he was able to create, and so she forgave him. The conversation must have gone something like this:

(Hera): “Dear son, I forgive you for being ugly and I no longer regret that you didn’t die when I threw you from the heavens into the ocean. Because I have now forgiven you, I command you to return to me at Olympus, your birth place.”

(Hephaestus): “Wow mom, although I am truly overcome with your sudden change of heart and your immense graciousness, I kind of like living here with my bevy of mermaid-like surrogate moms so I won’t be joining you anytime soon.”

So Hera did what any responsible mother would do: she sent Dionysus, Hephaestus’ brother, to get him drunk on wine, who then slung him onto a donkey, which he then rode back to Olympus, where he officially joined the ranks of the gods.

Now that he was a god, his mother rewarded him with his very own massive underground workshop, fully equipped with all the latest metal fabrication machinery. In fact, C Marshall Fabrication is rumored to still have a few old invoices from Hephaestus in its archives (some of the invoices are made out to Cyclops, but keeping a low profile was typical “Heph”, for those who knew him).  It was in this workshop that Hephaestus and his one-eyed helpers continued to create beautiful jewelry for all the Olympian goddesses, as well as weapons, furniture and armor.

Some of Hephaestus’ most famous creations include:

-Thunderbolts for Zeus

-Athena’s shield

-Arrows for Eros (the god of love)

-The chariot for Helios (the sun god)

-The invincible suit of armor for Achilles (too bad it didn’t cover his heel)

Hephaestus is less known for also having created the first woman. This turned out to be a total disaster and proves that he should have stuck to metal fabrication. The name of the first woman, whom Hephaestus fashioned out of clay, was Pandora. Possibly because she was ordered from the back of a comic book (like those Sea Monkey ads – remember them?), she came with one (1) FREE supernatural jar, which contained all the evils of the world and which she then, in the first documented case of PMS, promptly released on all of mankind.

C Marshall Machinery has taken these lessons to heart, and that’s why we stick to what we’re good at. If you are looking for a woman or a golden robot, check in at Olympus and talk to Hephaestus and his team of Cyclopes. On the other hand, if you are in the market for top-notch metal fabrication machinery, give the folks at C Marshall a call.

-Anja Wulf

Manufacturing News

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Best Month for Manufacturing Job Expansion Since 1973

Manufacturing Jobs Begin A Rebound
Despite the slow overall recovery, the factory jobs picture in February was as strong as it’s been in any month since 1973.

It’s possible that January’s massive storms led to more hiring in February due to pent-up demand. But company managers say, and data show, that hiring is on the rise in the manufacturing sector.

Nationally, the Manufacturing Institute for Supply Management (ISM) report said 56 percent of factories were keeping employment level, and 35 percent added people to their staffs in February. Those kinds of readings have not been seen in 38 years.

U.S. Manufacturing Boom Stems Risk of Post-Quake Stock Panic

To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net

“U.S. manufacturing is booming” and helps explain why stock investors shouldn’t panic over Japan’s nuclear disaster or the Middle East’s conflicts, according to Edward Yardeni, president and chief investment strategist at Yardeni Research Inc.

Growth has been “surprisingly robust” and may be accelerating, Yardeni wrote today in a report. He cited the Federal Reserve Bank of Philadelphia’s factory index for March, which showed the fastest expansion since 1984. The indicator for eastern Pennsylvania, southern New Jersey and Delaware climbed to 43.4 from 35.9 in February.

In February, the ISM index rose to 61.4, matching its highest level since 1983. Readings greater than 50 point to expansion. The indicator has risen for seven straight months.

“It is becoming increasingly obvious” that U.S. factories are taking part in a global manufacturing surge that includes countries such as Germany and South Korea, Yardeni wrote.

The growth is among a dozen reasons not to panic over what’s happening in Japan and the Mideast, the report said. Others include “super-normal” earnings growth, a rebound in employment, a pickup in takeovers and “extremely stimulative” fiscal and monetary policy.

Japan vs. Haiti: Quality Metal Fabrication & Construction Saves Lives

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By any measure, the recent earthquakes and tsunami in Japan have been disastrous. Even so, it is amazing how many of the tall structures in Japan remained standing. Many more lives would have been lost if Japan’s infrastructure and building codes were less stringent.

To show the importance of quality construction and building codes, here are some interesting — and chilling — statistics to compare:

Haiti had a 7.0 earthquake on Jan. 12, 2010. Its epicenter struck near its capital, Port-au-Prince. Out of a total estimated population of 9,719,932, over 222,570 people were killed, 300,000 injured and 1.3 million were displaced.

That means that over 2% of Haiti’s population was KILLED and over 13% were homeless as a result of the 7.0 earthquake there last year. As regards the area where the damage was most severe, that comes to a death rate of 11.5 percent of the approximately two million people living in the immediate area of Port-au-Prince.

On March 11, 2011, Japan had an 8.9 magnitude earthquake 80 miles offshore, followed by a devastating tsunami, which rolled in at 600 mph. The March 11 earthquake was preceded by a series of large foreshocks over the previous two days, beginning on March 9th with a magnitude 7.2 event approximately 24 miles from the March 11 earthquake, and continuing with a further 3 earthquakes greater than magnitude 6 on the same day. The 8.9 magnitude earthquake was the worst in recorded history.

Japan’s death toll is currently around 7000, but it is far too early to tell. I can only imagine, in light of the devastation, that it could easily climb to 20,000 by the time these numbers are finalized.

Japan has a total population of 128.05 million.

Even if the current projected death toll from the recent earthquakes and tsunami more than double to 20,000, that would still keep it at only 1 fatality in 10,000 – a VERY far cry from Haiti’s recent earthquake disaster, which again claimed over 20 out of 1000 of its total population. If Japan’s death toll had equaled Haiti’s, in terms of percentages, then their death toll in terms of numbers would have been 2,156,000. That’s 2,555,000 or so lives that WEREN’T lost, that could have been, if conditions in Japan had matched those in Haiti.

The key difference between the infrastructure in the two countries can be summed up in two words: building codes.

It was observed that the vast majority of the tallest buildings in Japan’s urban areas stayed intact. Skyscrapers were seen to sway with the impact, but they stayed put. In fact, they were built to be able to sway that way. That’s part of what makes them so resilient to earthquakes.

Shorter buildings in Japan are built on tight coils, or springs, which decouples the buildings from the ground vibrations during an earthquake.

Haiti didn’t much care about building codes. Thousands upon thousands of people ended up being trapped in the rubble or displaced and homeless.

Japan has stringent building codes (the good news is, building codes in the US are on a similar par to Japan’s). This has made a huge difference in terms of the most recent natural disaster’s impact on that country, as opposed to the impact of the Haiti earthquake. This is not to make less of what actually has happened in Japan. But it really could have been a lot worse, if they hadn’t been this well prepared for it in terms of adhering to their building codes.

In fact, the vast majority of the destruction in Japan was due not to the earthquakes, but to the tsunami.

The estimated increase in construction costs for an earthquake-resistant structure that adheres to the strictest seismic codes is around 10%. Not bad, considering the amount of prevention available in this cure.

Steel framing and reinforcements are the most effective performers for earthquake resistant structures, provided that their connections are of a high quality. Metal is the top choice for builders when it comes to making a building earthquake resistant. Earthquake resistant buildings are constructed in a flexible mode, which means that in the event of an earthquake, they won’t break. They will just move.

Which brings us back full circle to the importance of quality metal fabrication machinery and construction. When you look at the amount of lives they truly can save, this manufacturing industry could be said to be the true unsung heroes of this piece.

-Anja Wulf

Manufacturing Output Rose In February

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Manufacturing Output Rose In February.

The New York Times /AP (3/18, B3) reports that US manufacturing output rose in February for the sixth straight month in a row, gaining 0.4 percent, according to the Federal Reserve. “Manufacturers have increased production in 17 of the 21 months since the recession ended,” and “stronger factory activity has been an important factor supporting job growth” During February, “factories added 33,000 job.”

Bloomberg News (3/18, Willis) reports that February’s growth “followed a 0.9 percent January gain that was three times as large as initially estimated, Fed figures showed today.” Firms are “benefiting from overseas demand, business investment and inventory restocking that are fueling manufacturing.”

Industry Week (3/18) reports, “The production of durable goods advanced 0.9% in February, and gains were widespread across its major categories.” Motor vehicle production rose 4.2%, and “sizable gains also were recorded in February in wood products; nonmetallic mineral products; computer and electronic products; electrical equipment, appliances, and components; furniture and related products; and miscellaneous manufacturing.”

The “Real Time Economics” blog of the Wall Street Journal (3/17, Lahard) reports that while factories in general are seeing a low level of capacity utilization, textile mills, apparel makers, and producers of computer and peripheral equipment have seen a significant tightening of capacity, although for the first two it’s mostly due to a drop in US productive capacity.

Fed: Philadelphia Area Manufacturing Up.

According to the Philadelphia Inquirer (3/18, Schweizer), the Federal Reserve Bank of Philadelphia reported that, “riding a wave of new orders, manufacturers in the Philadelphia area ramped up production this month to the highest level in more than 27 years,” rising to 43.4 from 35.9 last month. “The strength was broad-based, the Philadelphia Fed said, with manufacturers’ shipments of finished products, unfilled orders, and labor conditions all at high levels.”

Bloomberg News (3/18, Willis) reports, “Rising exports to emerging economies such as China, along business investment and inventory rebuilding are generating bigger gains in factory production.” Industry Week (3/18) reports, “Increases in input prices continue to be widespread, and more firms have been reporting increases in prices for their manufactured goods in recent months. Most firms also indicated that they expect acceleration in production over the next quarter.”

According to the Philadelphia Business Journal (3/18, Kostelni), the indicators “pointed to an uptick in future production activity during the next quarter.”

As Copper Prices Rise, Manufacturers Switch To Aluminum.

The Wall Street Journal (3/18, Whittaker) reports that increasing copper prices have manufacturers turning to aluminum, as the difference in cost of the metals has reached the point that it is greater than the expense of retooling some manufacturing processes as well as the cost of the extra aluminum needed to conduct the same amount of electricity in copper. Wiring for cars and buildings, as well as evaporator and condensing coils for air conditioners and refrigeration are poised to make the switch.

From SME Daily Executive Briefing 3/18/2011

Fixing the oil industry, one beer at a time

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The importance of the pipeline in industry, agriculture and nearly every vital facet of civilization cannot be under-emphasized. Without pipeline construction, we would lack plumbing and electricity, not to mention access to gas & petroleum reserves. But perhaps the pinnacle of modern civilized uses for pipelines can be found in a German town by the name of Gelsenkirchen. The pride and joy of this fair city is a football (European for soccer) stadium known as the Veltins Arena, the self-described “cult temple” of the German football league team FC Schalke 04.

The Veltins Arena is considered to be the finest football stadium in Europe, in a town where football is publicly acknowledged to be nearly on a par with religion. In spite of the fact that its construction is an ultra-modern miracle of architecture, the Veltins Arena is most well-known for its pipeline. Why? Because, unlike most pipelines, this one transports beer.

A massive undertaking of over 5 km in length, the Veltins Arena beer pipeline was constructed to ensure that its fan base would never “run dry”. All 100 bars and restaurants in the Veltins Arena are connected by this beer pipeline to a central tank, which ensures that large differences between between demands during various stages of a match are more easily overcome. This feature of the arena is so important that the German brewery which supplies the beer also obtained the stadium’s naming rights. The brewery’s name? You guessed it: Veltins.

At the end of a football match in the stadium, two key statistics pop up on the arena’s scoreboard: the number of people in attendance, followed by the number of liters of beer consumed. This so impressed a Russian politician by the name of Alexander Vakhmistrov that he decided the city of St. Petersburg absolutely HAD to have a beer pipeline in their stadium as well. The only hitch in his plan was the law in Russia that forbids the sale of alcoholic beverages at sporting events.

I am bringing this up because beer pipelines might be the answer to a serious problem facing the oil industry right now. Reports of major oil pipeline gluts are rampant. There are more pipelines than there is oil to fill them, and many are operating well below capacity. Add to that of course the general public’s love-hate relationship with the oil industry, the recent oil rig disaster in the Gulf, and you have a financial and PR situation of considerable magnitude.

So here’s my foolproof, 3-day PR strategy and financial recovery plan for the oil industry: start using your untapped oil pipelines for the transport of beer into households, immediately. This would not only make people love you but you’d finally have a revolutionary new income-producing opportunity in keeping with the times that would allow you, and your stockholders, to make a full financial recovery. After all, it’s getting to a point where no one can afford gas anymore anyways, which may soon lead to a total change in lifestyle, characterized mainly by people staying at home more. And what at-home activity isn’t made just a little more pleasant when it’s accompanied by a few glasses of beer? I can’t think of a better way to re-instill consumer confidence in the oil industry, literally overnight.

There have been a few recent examples of beer or wine “flowing like water” directly into private residences. In 2006, a Norwegian woman turned on her faucet, only to find that instead of water, beer was flowing out of it. This turned out to be the fault of the bar on the lower floor of her apartment building, which had literally gotten the plumbing lines of their beer delivery system crossed.

Then, in October 2008, residents of Marino, Italy were only too tickled to find out that they had apparently turned water into wine – on the same day as their annual Grape Festival, no less. 10 to 12 households found that when they turned on their faucets, wine poured out – if only for 3 minutes or so. Although they initially assumed it to be a gift from the City Council, it turned out this was due to a mistake in plumbing once again. Apparently, every year during the Grape Festival, the water supplies to the main fountains in the town center are turned off and wine is channeled into them instead. Only in this case, the wine was mistakenly channeled into a few private nearby homes.

Both of the above were clearly mistakes, but look how happy it made people.

I can imagine a day in the not-too-distant future, where I go to my local BP station and purchase several gallons of – beer. Think about it: I can buy a pint of beer for as much as what gas stations charge for a gallon – and buying a pint of beer makes me a lot happier than buying a gallon of gas. It also makes good economic sense for the oil giants to simply replace gasoline with beer. Not only would they be able to charge for a pint what they’re currently charging for a gallon, but they would finally win back the hearts of the people. “Fill ‘er up” might take on a completely different meaning one day.

If any of you pipeline manufacturers decide to take me up on this idea, all I ask is that you furnish my personal residence with a tap.

-Anja Wulf

LIVING OUTSIDE THE BOX

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As part of my education in Anthropology at the University of Chicago, I had the opportunity to study up on different architectural styles of housing throughout the ages. Most established styles, of course, are derived from a function of design that works best in a particular geographical environment and that lends itself most easily to the tools, available resources and manufacturing processes of the time.

In spite of this, or maybe even in keeping with the inherent underlying practicalities of design, it still always bothered me that the vast majority of homes and houses are rectangular and not round.

Considerations of the manufacturing process laid aside, I always thought that a house with rounded edges would be far more homey than a house with straight edges (insert Freudian comment referring to mother’s womb here). And yet, there are very few examples of architecture to date which accommodate this type of design. Could it be because it’s easier to make and intersect straight lines into a functional design? Possibly. I prefer to leave the manufacturing process to those who can do it. But, at least to my own untrained eye, existing technology for manufacturing rounded edges seems pretty prevalent (C Marshall Fabrication Machinery’s plate roll and EZ-Seam model WT 6/14 Weld Positioner  being but two examples), so maybe in this day and age at least, it’s just a matter of bucking tradition.

I mean, they call it “thinking outside of the box” for a reason.

Enter the giant fuel storage tank.

Rumor has it that we will not always be as dependent on oil as we are now. Giant fuel storage tanks are not only an industrial marvel, but they are frequently the tallest structure on a landscape. Archaeologists have always been prone to assuming that the tallest man-made structures excavated were temples dedicated to the gods, rather than serving any practical function. In my not so humble opinion, a lot of these structures were falsely labeled as being exclusively places of worship. After all, if I had been around a few thousand years ago, I would’ve wanted the most bang for my buck, especially if the manufacturing tools of my trade consisted of crude hand-held and handmade instruments. If I was going to build a huge structure, I’d want to make sure it served a practical function – even if it was in addition to a religious or spiritual one.

Let’s fast-forward into a distant future, where our current ways of life have morphed into something completely different.

It’s likely that those giant cylindrical fuel storage tanks would still be standing. After all, they are leak-proof, fire-resistant, impact resistant and even bullet-proof. Could they too one day be interpreted as places of worship? Even if they were, it wouldn’t be too far off the mark, considering that today’s global economy and even international relations and wars are “fueled” by the demand for oil.

More importantly, I think these fuel storage tanks have kind of a unique, cozy appeal to them. That’s right, I think they’re cute. In fact, they bring out the Happy Susy Homemaker in me.

Let’s pretend we can clean them up pretty easily. Again, I’d defer to the industry experts to figure this out: if they can build these giant monoliths, cleaning them up should be relatively easy by comparison. In which case, we’d be left with a super-resilient, tall, round, hollow structure.

Now let’s insert a few floor plans. I’m thinking three floors total. I’m a little partial to wood flooring but I’d settle for bamboo or even tempered concrete. They actually look great with throw rugs on them. Kind of an urban-chic-meets-rustic-retreat kind of feel.

Throw in a bunch of windows, a few balconies just for fun and a pretty solar roof with ample skylights as well as a huge balcony up top, and finally a little elbow grease and a few coats of fresh paint, and there it is: my Barbie Doll dream home.

The fact that a lot of these storage tanks are already located in truly beautiful settings, including but not limited to prime waterfront, is also a nice plus.

Personally, I’m pretty convinced I’m a genius ahead of my time. If you think I’m completely off base here, or if this is the most impractical thing you’ve ever heard of, tell me why. But in closing, consider this: some of the best diners and mobile homes are made out of old railroad box cars and shipping containers. Of course, they’re not round, and they’re not bullet-proof.

Just sayin’.

Waterfront luxury townhome, anyone?

-Anja Wulf

Manufacturing Sees Steady Job Gains.

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NPR’s Weekend Edition (3/5, Arnold) reported on the “steady job gains” that have been made in the US, many of them in manufacturing. The story highlights the successes of AccuRounds, “an advanced manufacturing facility in Avon, Mass.,” that “makes a broad range of precision-tooled metal parts.” The company has seen its orders increase over the past several months, and consequentially has begun a steady stream of hiring. Similar stories are being told across the manufacturing sector. This most recent decline in unemployment “doesn’t mean the unemployment problem is over. But companies are hiring at a pace that should continue to bring down unemployment slowly.”

Unemployment Falls Below 9%. The Los Angeles Times (3/5, Puzzanghera) reports “average Americans might look back on February 2011 as the point when the country finally turned the corner,” although the recession has technically been over since the middle of 2009. “The Labor Department said the economy added 192,000 new jobs last month, a sharp increase that helped trim the unemployment rate to 8.9% – the first time it has been below 9% in nearly two years.” Analysts pointed to the lowered unemployment, as well as “encouraging data on auto sales, chain store revenue and other economic barometers” as evidence that the US economy had likely reached “escape velocity” from the downturn. Energy prices, particularly oil volatility stemming from the unrest in Libya, remain a concern however.

Bloomberg News (3/5, Homan) reported, “Hiring was widespread, with manufacturing, construction and transportation companies adding workers, underscoring Federal Reserve Chairman Ben S. Bernanke’s testimony to Congress this week that there are ‘grounds for optimism’ in the labor market.” Bernanke cautioned that “the labor market ‘has improved only slowly,’ and it may take ‘several years’ for the unemployment rate to reach a ‘more normal level.'” Even so, he added, “we do see some grounds for optimism about the job market over the next few quarters, including notable declines in the unemployment rate in December and January, a drop in new claims for unemployment insurance, and an improvement in firms’ hiring plans.”

Falling Unemployment Not Cheering Liberals Or Conservatives. The AP (3/7, Kuhnhenn) reports unemployment “is dropping, but the reaction from both the left and right ends of the political spectrum is surprisingly unenthusiastic.” Conservatives “fear the improvement will weaken their argument that the way to bring back jobs is less regulation and more fiscal discipline,” but liberals “worry that better job numbers will create momentum for spending cuts that will cause the fragile recovery to falter.” The “divided reaction illustrates the ideological forces pulling at President Barack Obama as he tries to gain economic and political traction out of the positive jobs report.” Austan Goolsbee, chairman of Obama’s Council of Economic Advisers, said, “Overall, it’s a very solid jobs report. And overall there’s been increasing optimism that despite having a long way to go, we’re clearly headed in the right direction and we’re putting some miles behind us and trying to get back to a good situation.

Retail Sales Probably Rose In February.

Bloomberg News (3/7, Willis) reports, “US retail sales probably climbed in February by the most in four months, spurred by job growth and more seasonable temperatures,” according to a poll of economists taken by Bloomberg. “Chain-store sales did well, automobile sales improved sharply and employment bounced back” said one IHS Global Insight analyst. “Households may have realized that they have some extra cash in their pockets due to this year’s cut in the payroll tax.”

US Companies Increase Spending, Dividend Payments.

The Wall Street Journal (3/7, C1, Evans, subscription required) reports US companies have a record $1.4 trillion on hand, and there are indications that they are beginning to increase spending on new hires and dividends. The Journal notes Standard & Poors analyst Howard Silverblatt has reported 87 companies have increased dividends, while 7 additional companies have announced plans to pay a dividend, compared to 78 in the first quarter of last year. S&P forecasts dividends will reach $225 billion by the end of the year.

SME Daily Executive Briefing, March 7, 2011

Unemployment aid requests fall to near 3-year low

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WASHINGTON – The number of people requesting unemployment benefits last week plunged to a nearly three-year low, bolstering the likelihood that companies will increase the pace of hiring this year.Applications for unemployment benefits fell by 20,000 to a seasonally adjusted 368,000, the Labor Department said Thursday. It was the third decline in the past four weeks. Applications are now at their lowest level since May 2008.

The four-week average for applications, a less volatile figure, fell last week to 388,500. That’s the lowest level since July 2008, the last time the four-week average was below 400,000.

Applications that remain consistently below 375,000 tend to signal steady declines in the unemployment rate. Unemployment benefit applications peaked during the recession at 651,000.

Analysts are predicting strong job gains in the March employment report, which the government will release Friday. Brightening the outlook for more aggressive hiring, the service sector expanded at the fastest pace in more than five years in February, and the manufacturing sector grew last month at the fastest pace in nearly seven years. And retailers are reporting solid gains for February after the best holiday shopping season since 2006.

Stocks surged after the economic data was released. The Dow Jones industrial average rose by more than 180 points in morning trading.

“Often at this stage of the recovery, when these signals are in place, we see a surge in hiring,” said John Ryding, an economist with RDQ Economics.

Economists estimate that employers added a net 175,000 jobs in February. That would mark an improvement from an anemic 36,000 jobs in January when severe winter weather held back hiring.

At the same time, economists think the unemployment rate edged up to 9.1 percent in February. Unemployment rates often tick up when an improving economy causes out-of-work people who haven’t been looking for jobs to start. People out of work aren’t counted as unemployed unless they’re job hunting. During a weak economy, some people become discouraged and stop looking.

Separately, retailers reported revenue gains for February, extending the spending momentum seen during the holiday season. Limited Brands Inc. and Macy’s Inc. reported gains that beat Wall Street expectations, while Target Corp. announced an increase slightly below analysts’ projections. The figures are based on revenue at stores open at least a year and are considered a sign of a retailer’s health.

The service sector, which employs about 90 percent of U.S. workers, grew in February at the fastest pace in more than five years, according to the Institute for Supply Management. It marked the sixth straight monthly increase. The sector covers a broad range of industries including retail, health care and financial services.

Another report Thursday confirmed that workers boosted their productivity in the final three months of 2010 at the fastest pace in nine months.

The downward trend in applications for unemployment benefits suggests that companies are easing the pace of layoffs now that the economy is strengthening consistently. During the recession, companies slashed work forces, cut or froze workers’ pay and took other aggressive steps to reduce costs.

Stronger job creation is needed to steadily reduce unemployment. Economists say it would take up to 300,000 new jobs a month to reduce the unemployment rate significantly.

Thursday’s report also showed the number of people receiving unemployment benefits dropped to 3.77 million, the lowest level since mid-October 2008. That doesn’t include millions of people enrolled in emergency unemployment benefit programs funded by the federal government.

An additional 4.5 million unemployed workers received benefits under the extended programs during the week ending Feb. 12. Altogether, 9.2 million people were on the benefit rolls that week.

By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa – Thu Mar 3, 12:32 pm ET