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Manufacturers see relief

| Friday, June 14, 2002

WASHINGTON — The nation's manufacturers, who were hardest hit in last year's recession, said Thursday they see growing signs of an economic turnaround but cautioned that the rebound will be moderate.

The National Association of Manufacturers, the trade group representing 14,000 American companies, said its members believe growth will increase in the second half of this year, helped by continued strength in consumer spending.

But NAM President Jerry Jasinowski said the members of his organization see plenty of potential threats to the economy, ranging from weakness in corporate profits to the uncertainty of further terrorist attacks, which he said was undermining confidence.

"The government must do a better job of integrating its intelligence information gathering and analysis to alleviate anxiety about future terrorist attacks," Jasinowski told reporters at a briefing on the group's latest economic forecast.

The NAM forecast is for economic growth in the current April-June quarter of 2 percent to 2.4 percent, just half of the 5.6 percent growth of the first quarter, which came primarily from a big swing in business inventories.

"For the second half of the year, we expect GDP growth to accelerate to almost 3 percent and we see no chance of a double-dip recession," Jasinowski said.

He said NAM member companies are slightly more positive about the outlook for hiring in coming months. Manufacturing was the hardest-hit sector of the economy with job losses topping 1 million workers since employment peaked at factories in the spring of 2000.

Jasinowski said a survey of NAM's 30-member executive board found that manufacturers now expect a rebound in corporate profits will be delayed until the second half of this year.

More than four-fifths of the executive committee, 83 percent, predicted profits would begin to increase by at least the fourth quarter although 39 percent expected the annual rate of increase in profits to be only a modest 5 percent by that time.

Jasinowski said the profitability of U.S. companies would be helped by a continued fall in the value of the dollar. He predicted the U.S. currency, which has already dropped by about 8 percent this year against a market basket of major currencies, would decline by another 10 percent by the end of this year.

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