Milwaukee manufacturing lags national rate

The Milwaukee area manufacturing sector reversed its growth trend by declining in August, according to the latest report from the Institute for Supply Management-Milwaukee.

The Marquette-ISM Report on Manufacturing showed a seasonally adjusted purchasing managers’ index, a measure of industry growth, of 48.21, down from 52.43 in July. A number greater than 50 indicates growth, while less than 50 suggests contraction.

The local PMI has not been positive for more than three consecutive months this calendar year, with no trend emerging, the report said.

New orders, prices and imports were growing in August, while production, employment, supplier deliveries, inventories, customers’ inventories and backlog of orders were slower or in decline.

Both blue collar and white collar employment declined in August. Some respondents said they are not replacing employees lost through attrition.

Commodities prices were impacted by a slowdown in Brazil, China and India, as well as a weakening rupee.

The average commitment lead time for capital expenditures decreased by 22 days, to 77 days. The average lead time for production materials increased by one day to 38 days. And the average lead time for maintenance, repair and operating supplies decreased by one day to 18 days.

Respondents had a downward shift in attitudes about the six-month outlook, with just 20.8 percent expecting positive conditions, down from 24 percent in July. About 58 percent expect the same conditions, while more than 20 percent expect worse conditions in the second half of the year. Some attributed the shift to the late start of the seasonal push.
Those who took the survey provided feedback, including:

  • “Domestic sales are softening.”
  •  “Most commodities (have) ample supply and prices seem to be drifting sideways.”
  •  “Economic conditions continue to be moving in a slightly positive direction during the month.”
  •  “Suppliers are hesitant to hire staff in replacement/growth anticipation.”

The Milwaukee numbers lag behind the national ISM report. The national ISM PMI for August was 55.7 percent, suggesting a healthy increase in production.

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