Are the first real green shoots of recovery now in evidence?
It may be another of the recession-inspired clichés, but there’s no denying the fact that the first signs, or green shoots, appear to be budding.
As June gets underway and almost a full year approaches since the initial economic cracks began to emerge, the embers of industry are starting to revive.
Manufacturing output perhaps suffered the greatest at the hands of the global recession, so it is possible that this sector could provide one of the most telling signs of economic recovery.
With the previously dying embers of the manufacturing industry now sparking into life again then, it could be suggested that the first flames of revival are alight now.
Global manufacturing output is gradually on the rise again according to news reports, while this is most definitely the case in the UK – where Honda for example, has restarted production at its Swindon factory after a four month shutdown.
The vehicle manufacturing plant had been closed after the immediate onset of recession and is now operating at around 50% capacity, though the fact that the factory has revived business is surely a positive sign.
It’s true to say that the UK manufacturing industry is still in contraction, however the sector has witnessed a third consecutive month of improvement and May saw the industry shrink at is slowest pace for a year. This is therefore seen as a sign that the downturn in UK manufacturing is at leasing easing.
In other good news for the UK, the 1st June saw the Pound reach a seven month high against the US Dollar as the ‘greenback’ continued recent falls. These falls are regarded as signs that the global economy is improving, with currency traders increasingly confident to switch to higher-yielding currencies.
Other signs of recovery include the positive trends observed in the mining and gold sectors, while demand and price per barrel of oil have also increased of late – all pointers that things are looking up. And if it’s a case of ‘get well soon’ for industry, then surely symptoms of restored demand for industrial gases could be seen in the longer term.
Many sources in the gases business have remained optimistic throughout the fiscal folly, and perhaps rightly so. Although at a lesser rate than usual, the industrial gas business will continue to grow in 2009 and with indications that industry is slowly recovering, perhaps the status quo will be restored sooner than first thought.
Furthermore, while the rise in oil demand & price may not be the best of news for consumers at the petrol pumps, it is a favourable dynamic for the industrial gases community. The rise in oil prices is thought to ‘stimulate’ the gases business, with a consistent link between the increase in oil prices and increase in demand for industrial gases observed in the past.
Keeping the champagne on ice
Admittedly, we’re still deep in the mire of economic gloom and it’s maybe a bit too soon to get out the balloons and bunting – there’s still a long way to go yet.
But the first foundations of recovery appear to be in place as we enter mid 2009, leaving margin for hope across industry.
The collapse of the US General Motors has been both spectacular and regrettable as a major casualty of the fiscal turbulence, and it’s true that some countries are only now beginning to feel the effects of recession. Switzerland for example, has just experienced two successive quarters of economic decline and has only now just officially entered recession.
Yet consumer confidence appears to be revitalised in other areas and stock markets have apparently been rising strongly following upbeat economic news of late.
It will surely be some time before the gases industry feels the benefit, as the domino effect of recovery picks-up further down the chain, but the overall vibe seems to be one of optimism at present and it wouldn’t be without reason to hope for business as usual in the gases business in the next 12-18 months.