Manufacturing activity still high, but down from November’s record growth

Manufacturing activity in southeastern Wisconsin and northern Illinois in December was not as robust as in November; however, it still remained high, according to a new report.

The Marquette-ISM Report on Manufacturing showed the seasonally adjusted Purchasing Managers Index was 57.6 in December, down from 70.25 in November.

November’s reading was the highest in the index’s 16-year history, according to Michael Antonelli, equity sales trader at Milwaukee-based Robert W. Baird & Co. Inc. The previous high was 70.00 in September 2007.

Any number above 50 is an indicator of increased monthly production among manufacturers in southeastern Wisconsin. The Milwaukee index has been above 50 for 14 of the past 16 months.

In the December survey, respondents said:

• There has been reduced inventory and customer service from suppliers. The suppliers seem like they are trying to do more with less staff. This seems likely to be a long-term issue.
• Major cost drivers such as oil and natural gas are allowing some commodity prices to slide; however, it remains to be seen if this can be sustained.

New orders, production, employment, inventories, customers’ inventories, exports and imports all grew in December. Supplier deliveries, prices and backlog of orders were slowing or declining.

Regarding these indices, respondents said:
• Orders are moving quickly compared to previous months.
• The incoming sales during late November and December are typically slow.
• Pork pricing is lower.
• There have been marketing efforts to increase export business.
• Quote requests are up.

Seasonally adjusted blue collar employment declined, from 67.9 in November to 52.6 in December. Seasonally adjusted white collar employment also declined, from 60.1 in November to 52.6 in December. Respondents in the December survey said workers are scheduled to be laid off in January.

In the six-month outlook on business conditions, respondents indicated a downward shift in positive expectations compared to November. About 38.5 percent of those surveyed expect positive conditions over the next six months, 53.8 percent expect conditions to remain the same and 7.7 percent expect conditions to worsen.

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