“Built” Does Not Equal “Sold”
September 02, 2010 at 16:42 PM EDT
The year is 67% finished. A few investors apparently want to start waving their banners now, which is as good an explanation as any for today’s sharp stock market rally. Media reports give credit to stronger-than-expected U.S. and Chinese manufacturing data. Yet all this proves is that companies can make more stuff even in a slowing economy. The mere fact that a product has been made does not mean anyone has bought it. Even in today’s efficient factories, manufacturers must necessarily plan ahead. Sometimes the plan turns out to be too optimistic and they are stuck with unsold merchandise. Or maybe the products get partway downstream, to the distributor level, but consumers still won’t bite. Speaking of consumers, one manufactured good they aren’t buying more of is automobiles. Detroit just posted its worst August sales in almost 30 years. Last August, you may recall, was the end of the “cash…