The decline provided new evidence of the weakened state of the US economy, says ATA chief economist Robert Costello. "I've been concerned that the recent run-up in tonnage might not be sustainable, and clearly March's figures confirmed that apprehension," he remarks. "The tonnage drop might suggest that the pullback in the economy could be more severe than previously thought."

Various signs suggest manufacturing and consumer spending will generate even less freight traffic in months to come. The Manufacturing ISM Report On Business from the Institute for Supply Management Economic in Tucson reveals activity in the manufacturing sector failed to grow in April even as the overall economy expanded for the 78th consecutive month. According to the report, the institute's primary manufacturing index fell below 50 percent for the third month in a row.

"Manufacturers are in a situation where both new orders and production are slowly declining, but prices continue to rise at highly inflationary rates," says Norbert J. Ore, chair of ISM's manufacturing business survey committee. "Bright spots this month are the growth in the backlog of orders index after six consecutive months of decline, continued strength in new export orders and a reduction in customers' inventories."

Additionally, according to the Q1 Manufacturing Barometer from PricewaterhouseCoopers LLP in New York City, optimism in the domestic economy has dropped dramatically among US-based manufacturers. Only 12% of senior executives surveyed are optimistic about the nation's economic prospects over the next year, a drop from the 29% who were optimistic the preceding quarter and 57% a year ago.

"We knew industrial manufacturers were feeling the pressures of the economic downturn," says Barry Misthal, partner and industrial manufacturing sector leader at PricewaterhouseCoopers. "However, the reality of the situation really hit us when we saw this quarter's findings. We expect confidence will remain low for much of 2008, but we are hopeful that the sector will begin to look up as 2009 approaches."

On a positive note, respondents indicated that international markets continue to offer opportunities. Sales increased for nearly two-thirds of manufacturers selling abroad, and international sales projections remain steady at 35% of total revenue. One fourth of the executives surveyed reported plans to develop new overseas facilities at some point and more than one fourth have foreign expansion plans during the next 12 months. At the same time, only 38% are optimistic about the world economy, a 26-point drop from the previous quarter and a considerable 45-point drop from a year ago.

"It appears mounting uncertainty about the US economy is starting to affect opinions about the world economy," says Misthal. "However, to weather this economic storm, industrial manufacturers must set their sights on growth opportunities abroad, while at the same time maintain the health of their domestic operations by controlling costs and making selective investments of capital."

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Manufacturing Declines Lead to Fall in Truck Tonnage

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