Latest Report on Monthly Printing Shipments and Quarterly Profits
Printing Shipments Rise for Seventh Consecutive Month
The printing industry had an excellent November, with shipments increasing +$504 million compared to 2005, a 6.2% rise. Comparative shipments are up for seven months in a row in current dollars, and for four consecutive months in inflation-adjusted dollars. The rise on an inflation-adjusted basis was +$355 million, or 4.6%.
Printing Profits Up Four Quarters in a Row: Time To Cheer?
Annualized, inflation-adjusted printing industry profits before taxes increased yet again. The industry produced $4.59 billion in profits over the last four quarters. This is the best industry profits performance in three years, though we are still running at the rate of about one-third that of 2000.
The question is whether or not this is sustainable. Our analysis shows that most of the profits appear to have origins in cost-cutting, especially in non-production employees. Sales per employee has gone down over the last year, while profits per employee has gone up. We explain this paradoxical situation and what it means in our latest “Data-to-Go” release.
We Get Questions
Q: What is the difference between “real printing shipments” and “current dollar shipments”? And why is the printing industry measured in shipments?
A: Real printing shipments are adjusted for inflation. Since inflation means that a dollar today buys less than a dollar did yesterday, then comparing things measured in dollars over a long period of time is difficult. Current dollar shipments are just dollars, with no inflation adjustment. Sometimes you might see these referred to as “nominal” dollars. Inflation distorts all kinds of historical analyses where the unit of comparison is monetary. For example, it is claimed that oil is at an all time high. It is, in current dollars, but it is far away from its high on an inflation-adjusted basis. A dollar in 1980 is not the same as one in 2007. Oil would have to reach $90 or so to be at the equivalent level today.
There are several inflation estimation methods. For a variety of reasons, we use the Consumer Price Index, but we regularly test and use the Producer Price Index and the Personal Consumption Expenditures deflator that is used in other economic reports. There is not one inflation measure that is totally satisfactory, but the CPI seems to work best, though it has its problems that sometimes cause economists and statisticians to come to fisticuffs in the academic equivalent of a bar brawl.
The reason shipments are measured is that companies can have revenues from other activities, such as investments or interest income. That can sometimes be misleading. The data used in our series refer to what was actually manufactured and shipped to a customer.
How is the Printing Industry Doing Compared to Other U.S. Manufacturing Industries?
Primary metals +15.7%
Machinery +11.4%
Petroleum and coal products +9.3%
Electrical equipment, appliances, and components +8.1%
Computers and electronic products +7.6%
Fabricated metal products +7.4%
Nonmetallic mineral products +7.0%
Durable goods industries +6.3%
Miscellaneous durable goods +6.3%
* 2006 CURRENT DOLLAR GDP +5.7%
All manufacturing industries +5.1%
Furniture and related products +5%
Chemical products +4.7%
Beverage and tobacco products +4.3%
Plastics and rubber products +4.2%
Paper products +4.0%
Nondurable goods industries +3.9%
Leather and allied products +2.3%
Transportation equipment +1.5%
* CONSUMER PRICE INDEX (last 12 months) +1.3%
Printing +1.2%
Food products +0.1%
Textile products -0.2%
Wood products -5.5%
Textile mills -6.8%
The above table is based on U.S. Department of Commerce data, in current dollars, for January through November 2006. Print has been regularly at the bottom of this list, but has been moving up steadily the past few months as shipments compared to 2005 have improved.
