An Obscure Indicator May Herald Happier Times

While doubts regarding the viability of the recovery are growing, investment analyst Bruce Kirk of S.G. Warburg & Co. is confident that economic activity accelerated at a healthy pace in the third quarter. The reason: Kirk notes that volume shipments of corrugated containers, which were down in the first half of the year, increased about 4.8% and 3% in July and August over their levels a year earlier.

"Shipments of corrugated containers," explains Kirk, "have historically been closely correlated with the changing momentum of economic activity, because almost all goods produced in the economy are packed in containers and companies generally order such packaging on a hand-to-mouth basis." In line with the pickup in demand, adds Kirk, prices of linerboard-the key ingredient of fiber boxes-have also strengthened recently.

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