Area manufacturing growth slows as year comes to end

But Milwaukee-area PMI remains in positive territory

manufacturing activity

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

Manufacturing activity in southeastern Wisconsin slowed in December, but the Milwaukee-area PMI remained in positive territory for a second straight month.

The Marquette-ISM Report on Manufacturing put the region’s PMI at 51.23 for December, down from 54.11 in November. Any reading above 50 indicates growth in the sector.

manufacturing activity

Respondents’ comments on the industry indicated many companies were looking to reduce inventories as the year comes to a close. Some also noted there has been some improvement in the oil and gas market.

Despite some mention of increased sales and demand, the comments in response to the survey lacked a high level of confidence.

“Looking positive but unsure,” one respondent said. “Some signs of life in Q1 orders but no increases beyond 90 days,” another said.

The index’s components showed declines in new orders, employment, inventories, backlog, exports and imports. Production, customer deliveries and prices all showed increases.

The six-month business condition outlook improved slightly to a diffusion index of 71.1 percent. The index attempts to address biases towards positive and negative outlooks.

The underlying data showed an increase in those expecting positive conditions moving forward, from 48.3 percent in November to 52.6 percent in December.

The percentage expecting worse conditions increased also, moving from 6.9 percent to 10.5 percent.

Employment in white collar jobs continued on a downward trend in December, dropping to 46.2 from 51.3. As recently as October the measures was at 59.3.

The outlook for blue collar jobs improved slightly to 51.6, but has been relatively steady over the last three months.

Wisconsin’s manufacturing sector as a whole also got some good news Friday from the Chicago Federal Reserve’s November Midwest Economy Index which showed the industry moving up slightly from 0.0 to 0.01. A reading above zero suggests the economy is expanding ahead of its historical growth rate.

The relative MEI, which measures industries against the nation as a whole, remained at 0.02 for manufacturing in Wisconsin.

Wisconsin’s MEI (for all industries) dropped slightly from -0.04 to -0.05, suggesting growth that is lagging behind historical trends. The decline was largely driven by a drop in the service sector and offset by slight gains in construction and consumer sectors, along with manufacturing.

The Chicago Fed region MEI (for all industries) remained at -0.01 with gains in Illinois (improving from -0.06 to -0.05), Indiana (0.02 to 0.04) and Michigan (0.13 to 0.14) offset by Wisconsin’s loss and a decline in Iowa (from -0.05 to -0.09).

The region’s relative MEI (for all industries) was down from 0.25 to 0.20 with Iowa leading the downward trend by moving from 0.11 to 0.03. Wisconsin also dropped from -0.05 to -0.07. Wisconsin’s decline was largely driven by the service sector and some decline in construction. Iowa meanwhile saw larger drops in manufacturing, construction and services, with just a slight increase in consumer. The region as a whole was boosted by Michigan, which improved from 0.20 to 0.23, despite a slight drop in its manufacturing sector. Gains in construction and services helped offset the drop.

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Arthur Thomas
Arthur covers manufacturing for 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.