Area manufacturing sector’s growth remains healthy, but slowed in April

Shipping delays cause production to slide

The headline number in the latest Marquette-ISM Report on Manufacturing for April showed continued growth in southeastern Wisconsin’s manufacturing sector, albeit at a slightly slower pace than March.

The Milwaukee-area PMI in the report was 63.69 for April, down from 66.48 in March. A reading above 50 indicates the manufacturing sector is growing.

A majority of survey respondents also expressed more confidence in business conditions going forward. The six-month business outlook diffusion index, which attempts to balance positive and negative bias, increased from 63.33% in March to 66.67% in April.

The shift was driven by an increase from 33.33% to 40% in the number of respondents expecting conditions to remain the same. Those expecting conditions to worsen dropped from 20% to 13.33% while the percentage of survey respondents expecting things to improve remained the same at 46.67%.

New orders and the backlog of orders have grown while production has slid by 20 percentage points, which survey respondents attribute to shipping delays.

Respondents highlighted two areas where they are experiencing challenges.

“Deliveries are about 2 months behind in items such as steel, aluminum, plastics and rubber,” one respondent said.

“Shipping delays are causing issues. It’s taking way too long to get materials and supplies unloaded and cleared through customs. We have to increase inventory but are still having negative impacts on our production until our inventory is healthy again,” another respondent said.

Other respondents expressed continued labor difficulties.

“We are trying to hire more individuals to reduce (overtime) of others, which is costing us a lot, but there is no one available to hire,” another respondent said.

A third respondent also said a shortage of labor has caused an increase in overtime for current employees, although attendance of current employees has picked up.

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