By Dr. Joe Webb on March 6th, 2007
January 2007 was a good month for commercial printing shipments, up $343 million on a current dollar basis compared to January 2006. December shipments were revised up by yet another $12 million. This represents nine consecutive months of positive comparisons to the prior year.
Current dollar shipments were up +4.9%. On an inflation-adjusted basis, January was up $199 million compared to last year. This is the sixth month of inflation-adjusted positive comparisons to the prior year, and is +2.8% compared to last year. It must be noted that the beginning of 2006 was very bad for our industry, and the comparisons are easy to beat. That is why it is important to compare the data to 2005 for a better perspective. On a current-dollar basis, January 2007 was $43 million better than 2005 (+0.6%), but down -$403 million on an inflation-adjusted basis (-5.2%).
Our forecast models have been updated. Below are the annualized forecasts that they currently report. Forecasting models can be set in their degree of reaction to the latest data. The “conservative” model is a slow-reacting model that picks up trends over time. The “aggressive” model usually will forecast wider swings in the data and can be either very optimistic or overly pessimistic.
The GDP model is a statistical model that uses changes in GDP to forecast print, and was discussed in my 3/5/07 column.
Conservative model: 2007: $92.0B 2008: $90.4B 2009: $88.8B Aggressive model: 2007: $79.9B 2008: $70.5B 2009: $60.8B GDP model (using +2.5% GDP growth rate): 2007: $86.6B 2008: $83.5B 2009: $80.3B All forecasts are in 2006 dollars.
Last year, there were $91.7 billion in shipments, which was -$1.4 billion less than 2005. It is likely that this year's shipments will even out with last years, and we're still using $89.0B as main forecast for 2007. We believe each of these models are wrong in their own way… but unfortunately, the long-run accuracy of the “aggressive” model tends to be pretty good, so we always have that in the back of our minds. We do think it is much too pessimistic. We also believe that the conservative model has “baked in” some trends that were present last year that will not be this year, especially political printing.
All in all, the January print shipments data were pretty good, and they were implied by the better-than-expected print production employmee data, which was up +1.8% compared to January 2005. We will get a peek at February's employment in a few days.