The brisk pace of manufacturing activity in the Milwaukee area has slowed considerably in the past two months, according to a report today by the Institute for Supply Management-Milwaukee.
August’s seasonally adjusted Purchasing Managers’ Index (PMI) was 42.9, a big drop from 46.7 in July. A PMI above 50 indicates growth, while a reading below 50 means the industry is generally declining.
The index had been above 50 for three years, until July’s index showed the sector is declining. The PMI was at 60.2 in June.
For 17 consecutive months in 2008 and 2009, the PMI was at 50 or below, according to ISM-Milwaukee.
Both white and blue collar employment and inventories stayed above the 50 mark in August. Both blue and white collar jobs were at 51.5.
However, new orders, production, customers’ inventories, prices, backlog of orders, exports and imports were all declining this month. Supplier deliveries grew at a significant rate in August.
Buying policies changed as well, with average commitment lead time for capital expenditures down 19 days to 114 days, average lead time for production materials up 14 days to 47 days and average lead time for maintenance repair and operating supplies up one day to 21 days.
Manufacturers’ comments from the survey included:
“No major supply chain issues during the month. Cost drivers remain stable with no cost increases anticipated through the end of the calendar year.”
“Customers have pulled back from optimism for normal September production pickup.”
“…(the) uncertainty relative to future economic environment is also slowing income order rate — from all corners of the globe.”