Growth in southeastern Wisconsin manufacturing picked up in December

The pace of growth in southeastern Wisconsin’s manufacturing sector picked up in December, but supply chain, inflation and labor issues remain, according to the latest Marquette-ISM Report on Manufacturing.

The report’s Milwaukee-area PMI came in at 58.28 for December, up from 54.52 in November. Any reading above 50 suggests the region’s manufacturing sector is growing. The December reading is the best since September and the 2.76-point jump from the previous month is the largest increase since March.

In the spring and early summer, the index registered in the low- to mid-60s for five-straight months.

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In recent months, however, the index has trended downward as inflation pushes costs up for manufacturers and supply chain challenges extend lead times. Companies also continue to deal with labor challenges, both short-term disruptions from the COVID-19 pandemic and longer-term issues in finding skilled workers as older generations retire.

Respondents to the December survey used for the report pointed to all those issues, although one did note supply issues are “getting better comparatively.”

However, respondents also pointed to new COVID-19 variants as a “new threat for business” and a source of uncertainty.

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On the labor front, one respondent noted employers are looking for lower cost labor in markets like India.

The report’s diffusion index tracking the outlook for the next six months did not change from November at 44.1%. The index attempts to balance positive and negative bias and the underlying data did show a shift on both ends of the spectrum.

In November, 64.7% of respondents expected business conditions to stay the same, a figure that dropped to 29.4% in December. The drop divided evenly to the positive and negative sides. The percentage expecting conditions to get better climbed from 11.8% to 29.4% while the percentage expecting things to get worse wen from 23.5% to 41.2%.

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