Milwaukee area manufacturing growth slowest since December 2016

Marquette-ISM declines for second straight month

manufacturing activity

Last updated on July 2nd, 2019 at 09:10 am

The Marquette-ISM Report on Manufacturing reached its lowest level since December 2016, matching other data that suggests the sector is slowing down.

The Milwaukee-area PMI declined from 56.63 in November to 52.87 in December. Any reading above 50 indicates growth in the sector, but the December reading was the third decline in the last five months. The August reading was nearly 65.

manufacturing activity

Comments from survey respondents indicated some optimism, but also highlighted uncertainty and “suddenly sluggish sales.”

One respondent was still looking for another record year in 2019. Another expected an increase in the first quarter but said there is “clear uncertainty” for U.S. and Chinese demand moving forward.

Respondents also said customers had overbought in response to new tariffs while others said increasing costs and prices were a concern throughout the year. In particular, respondents complained about trucking shortages and a lack of drivers.

The new order component of the monthly report was up slightly from November to December, but it remained deeply in negative territory at 36.3. Order backlogs increased from 46.2 to 53.9.

Production switched from growth to a decline, registering 46.6. The employment component also dropped from 64.6 to 52.

The slowdown in the Marquette-ISM report matches other recent data. Wisconsin saw three strong quarters of wage growth to start the year, but data from the U.S. Bureau of Labor Statistics showed a sharp slowdown in the state’s wage growth during October and November.

Other BLS data shows the number of hours worked by production employees in metro Milwaukee declined in October and November after reaching a five-year high in September. 

The Chicago Federal Reserve’s Midwest Economy Index also continued to show a slowing growth both in manufacturing and the broader economy in Wisconsin. Manufacturing growth dropped from 0.09 standard deviations above historical norms in October to 0.05 in November. As a whole, Wisconsin growth dropped to below the historical average.

Despite the slowing growth, the six-month business outlook in the Marquette-ISM improved slightly. The diffusion index, which seeks to balance positive and negative bias, increased from 50 percent in November to 53.13 percent in December, partially driven by an increase in the number of respondents with a positive outlook.

Similarly, the ManpowerGroup Employment Outlook Survey for the first quarter of 2019 showed employers were upbeat about hiring to start the year, including in durable and nondurable goods manufacturing.

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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.