Marquette-ISM survey respondents expect business conditions to worsen

Nearly half of the supply chain experts surveyed in the latest Marquette-ISM Report on Manufacturing expect business conditions to get worse in the next six months.

The survey found 47% of respondents expecting worse conditions, up from 33% in March. The shift largely came from a drop in the percentage expecting conditions to stay the same from 44% to 29%. There was an increase in respondents expecting improved conditions from 22% to 24%.

The rest of the monthly report, however, did not include much good news.

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The Milwaukee-area PMI, the report’s headline number, dropped from 47.86 to 35.73. It is the lowest reading in the report’s data going back to the start of 2014. The previous low was 39.44 in September 2015. A reading above 50 suggests growth in the region’s manufacturing sector while a reading below 50 indicates the sector is contracting.

Respondent comments were focused on the coronavirus, with one noting customer demand had fallen 35% and wasn’t expected to recover until fall. Another noted customers are deferring forecasts, potentially leading to a future gap in business.

Even what might seem like good news, a spike in food manufacturing sales, came with the caveat that the jump put extra stress on the supply chain and employees.

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The new orders index in the report fell 18.1 points, more than the overall PMI dropped. One respondent noted that all orders coming in are for small machine parts as large capital orders have fallen.

One respondent said SBA programs like the Paycheck Protection Program were helping their company maintain employment levels, but another said all of their company’s manufacturing had been moved to first shift and employees had been furloughed.

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