Area’s manufacturing growth slows in April

ISM index dips, but remains at high level

manufacturing activity

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

Manufacturing activity in the Milwaukee-area dipped to its lowest level of the year in April but remained above levels seen at the end of 2016.

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The Marquette-ISM Report on Manufacturing put the seasonally adjusted Milwaukee-area PMI at 57.87. Any reading above 50 indicates growth in the industry, but the April number was down from the 61.77 registered in March. January and February were also higher at 59.81 and 58.69, respectively. 

The comments from survey respondents seemed to suggest the April dip was more a result of dealing with increased levels of activity, not a signal of a slide in the opposite direction. Many comments focused on increased demand, upward pressures on prices and challenges getting materials from suppliers.

“Plenty of new orders for us,” one respondent said. “However, lower inventories from suppliers continue to be a problem in getting the new orders out the door.”

Another respondent highlighted the immediate needs of many customers.

“Everybody expects everything tomorrow, no matter what the (quantity),” the respondent said.

The other data points in the Marquette report told a slightly different story than the respondent comments. The prices index declined from 79.55 in March to 76 in April. Order backlog was also down from 66.67 to 54.55. Other measures that dropped, but remaining in positive territory, were new orders, production, employment and imports.

Supplier deliveries and exports both increased slightly and customer inventories improved from 28.95 to 38.1.

Lead times were also down across the board with capital expenditures decreasing from 114 to 99 days, production materials down from 40 to 34 days and maintenance, repair and operating supplies down from 17 to 14 days.

The six-month outlook for business conditions improved slightly with the diffusion index, which seeks to eliminate positive and negative bias, registering 72 percent. Forty-eight percent expect positive conditions going forward, down from 50 percent. The big shift was in the percentage expecting worse conditions, dropping from 13.64 in March to 4 percent in April.

Hiring plans for both blue and white collar employment declined during the month, but remained in positive territory.

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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.