Area manufacturing continues contraction in December

Marquette-ISM improves, but remains in negative territory

Manufacturing

Last updated on July 2nd, 2019 at 09:11 am

Manufacturing activity in the Milwaukee area continued to contract in December as the Marquette-ISM report registered a seasonally adjusted 48.53, an improvement from November and October when the index was 45.34 and 46.66 respectively.

The Marquette-ISM for December was 48.53. A reading below 50 indicates the industry is contracting, while a reading above 50 indicates growth. The index has been above 50 for 18 of the past 28 months.
The Marquette-ISM for December was 48.53. A reading below 50 indicates the industry is contracting, while a reading above 50 indicates growth. The index has been in negative territory for nine consecutive months.

The reading puts the index in negative territory for a ninth straight month. A reading below 50 indicates the industry is contracting, while a reading above 50 indicates growth. The index has been above 50 for 18 of the past 28 months.

“I think (the index) is very consistent with what I’m hearing in the manufacturing industry,” said Doug Fisher, director of Marquette University’s Center for Supply Chain Management, which produces the report.

Fisher added that he views the economy as “anemic,” but added that he’s not pessimistic about where things are headed.

“Compared to where we were in 2007, ’08, and ’09, this isn’t so bad,” he said.

Respondents to the survey were generally mixed in their expectations for the next six months. Half said they expect the same conditions, while roughly 42 percent said they expect things to improve. The percentage expecting worse conditions dropped from 17 percent in November to 8 percent.

“Overall, business seems flat to down slightly,” one respondent said. “I ask suppliers when they visit, and they are generally seeing the same thing. Lumpy demand, too (busy for several weeks, then nothing for several weeks).”

Another respondent said December had been a very slow month.

“Some orders pulled ahead into January but this is not a full market trend indicator,” the respondent added.

“I don’t see that there is a lot of downside to this thing slipping away, there’s just not a lot of energy in it.” Fisher said.

The report did find growth in new orders, production and employment, with all three registering above 50. The employment growth was seen for both white and blue collar jobs.

Despite the growth in some areas, 2015 was a challenging year for manufacturing. Manitowoc Cranes’ announcement of plans to close its Port Washington plant in December was just the latest in a string of bad news. The closure of the Madison Oscar Meyer plant will eliminate 1,000 jobs, GE is moving more than 300 jobs from Waukesha to Canada and Joy Global has announced a number of layoffs and closures.

Any number of factors have been blamed for these and other closures including reduced growth in China, a strong dollar and challenges in Europe.

“I don’t think any particular one of them is the problem,” Fisher said. “But you add them all up.”

Fisher said he expects to see privately held companies with strong balance sheets using the current environment to make acquisitions in an effort to come out stronger in the future. Publicly traded companies, meanwhile, will be looking to cut costs.

“There are opportunities in this kind of environment,” Fisher said.

Read more economic data reports on the BizTracker page.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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