Milwaukee-area manufacturing sector shrinks for third straight month

manufacturing activity

Last updated on October 1st, 2019 at 01:55 pm

The Milwaukee-area manufacturing sector contracted for a third straight month in September, according to the latest Marquette-ISM Report on Manufacturing.

The report’s Milwaukee-area PMI registered 45.41 in September, down from 47.29 in August. Any reading below 50 suggests the industry is contracting. The index was also below 50 in July and May. It is the first time the sector has seen a prolonged negative streak since a nine-month stretch in 2015.

The index has been below 50 in four of the last five months and its six-month average has now dipped below that threshold.

Respondents to the monthly survey said demand for products has been slowing and customer order reductions are extending into 2020. In particular, respondents expressed concern about slowing demand from Europe because of the economy.

Still, the six-month business outlook improved in September with 33% of respondents expecting conditions to improve, up from 23% in August.

The new order component of the index did improve 3.6 points from 43.8 in August, but it remained in negative territory at 47.45.

Production, employment, customer inventories, backlog and imports all dropped and were in negative territory in September.

Blue-collar employment in particular saw a sharp fall, from 57 in August to 45.2 in September. Some respondents said companies are exploring a temporary layoff of blue-collar workers while others noted company owners were keeping staffing steady to retain an effective team.

The Marquette-ISM is not the only negative indicator for the region’s manufacturing sector.

Manufacturing has made a negative contribution to the economic growth of the five-state Chicago Federal Reserve region in every month since April.

Statewide manufacturing employment decreased by 5,200 jobs in August compared to the prior year. It was the largest year-over-year decline – in absolute or percentage terms – since May 2010, according to data from the U.S. Bureau of Labor Statistics.

Average weekly hours for production workers have declined year-over-year for 11 straight months, the longest such stretch since an 18-month stretch in 2012 and 2013.

The average hourly wage for production workers in the state has been pushing higher throughout the year, averaging a 91-cent year-over-year increase.

Manufacturing employment in metro Milwaukee has been slightly stronger than the state as a whole, averaging a 0.43% year-over-year increase in 2019 compared to 0.22% for the state. Hourly wages, however, have averaged a 48-cent decrease.

Weekly hours stared the year strong in metro Milwaukee, showing year-over-year increases in January, February and March. Since then, however, hours have trended down, including a 4-hour drop from the previous year in July and a 1.3-hour drop in August.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at 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.

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