Manufacturing decline slowed in November

The Milwaukee-area manufacturing sector continued to decline in November, but at a slower rate than in the previous month, according to a report released today by the Institute for Supply Management-Milwaukee.

November’s seasonally adjusted Purchasing Managers’ Index (PMI) was 45.5, up from 43.3 in October.
The manufacturing sector was growing consistently for three years until July, when it dipped below 50. A PMI above 50 indicates expansion.
Production, employment, inventories, customers’ inventories, backlog of orders, exports and imports were declining in November. New orders and prices were growing, while supplier deliveries were slower.
Both blue collar and white collar employment were growing in November. The Blue collar employment index was 50, up from 45.5 in October. White collar employment was at 52, down from 57.1 last month.
Buying policies also changed. The average commitment lead time for capital expenditures decreased by 23 days to 83 days. The average lead time for production materials decreased by seven days to 37 days. And the average lead time for maintenance, repair and operating supplies remained steady at 20 days.
Survey respondents became less optimistic about business conditions for the next six months. In November, 24 percent expected positive conditions, down from 32 percent in October; 36 percent expected the same conditions, down from 42 percent in October; and 40 percent expected worse conditions over the next six months, up from 26 percent in October.
The following comments were made by respondents regarding the outlook:
“No sign of uptick in orders from customers, even in forecasts (due to) fiscal cliff, Europe…”
“Increase in taxes will negatively impact a slow, staggering economy.”
“Recent election results have reduced our optimism.”
“A month ago would have said better. Government policy moved me to same and leaning to worse.”
“Seasonal slow down.”
“Large percentage of sales into municipalities.”
Respondents also made general comments in November:
“Cost drivers are a mixed bag, as steel and gasoline decline but corrugated boxes increase. Generally, no supply of lead-time issues.”
“High feed costs will dramatically increase the cost of protein prices over the next year; especially beef, though pork, chicken and turkey will also be affected.”
“Moving product production back from Asia. Challenge is coordination of tooling/manufacturing time/materials and enough products in the supply chain to support the move.”
“We have had an internal shutdown this month for maintenance so the numbers are skewed to the low side”
“Distribution carrying lower than normal inventory on standard product.”

 

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