The manufacturing industry in southeastern Wisconsin continued to expand in November, according to the latest Milwaukee-area PMI, even as new orders and other components in the monthly index showed some cause for concern.
The Marquette-ISM Report on Manufacturing found a Milwaukee-area PMI of 56.63 for November, down from 58.21 in October. Any reading above 50 indicates growth in the region’s manufacturing sector. While still firmly in positive territory, the pace of growth has generally trended downward, averaging 59.6 over the last six months, compared 66.4 for the six months ending in May.
The index, however, has not dipped below 55 since December 2016.
Still, the November report included some negatives, including a sharp drop in new orders from 52.69 in October to 35.39. The measure has been trending downward since May, including a drop every month since August.
One respondent suggested customers may have over bought in advance of tariffs enacted earlier this year. Another respondent said businesses are not confident in 2019 forecasts and are scaling back plans for next year.
The business outlook for the next six months remained evenly split with a diffusion index of 50 percent. The index attempts to eliminate bias towards positive or negative sentiment. In October, respondents were evenly split between expecting improved, the same or worse conditions. The November survey found a slight increase in the percentage expecting either positive or negative changes.
Another economic report, this one released by the Chicago Federal Reserve, also shows a slowing of growth in the manufacturing sector in Wisconsin. The report, however, also highlights the industry’s support for the state’s economy.
The Midwest Economy Index measures the region’s economic growth in comparison to historical averages and relative to the country as a whole.
In the second quarter of the year, Wisconsin’s growth averaged 0.16 standard deviations above historical norms, including a 0.16 contribution from manufacturing. In the third quarter, the average dropped to 0.10 standard deviations above the historical average, including a 0.13 contribution from manufacturing.
Data for October, released on Friday, showed Wisconsin’s growth was only slightly above the historical average at 0.01, including a 0.09 contribution from manufacturing.
The relative measure followed a similar trend, averaging 0.06 in the second quarter, 0.03 in the third and -0.09 in October. Manufacturing’s contribution went from 0.12 to 0.10 to 0.05.
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