Region’s manufacturing activity remains at elevated levels

PMI increases after two down months

Milwaukee-area manufacturing activity picked up in June after two months of slight declines from the most recent high in March, according to the latest Marquette-ISM Report on Manufacturing.

The Marquette-ISM was discontinued for several months in 2016.

The seasonally adjusted Milwaukee-area PMI was 58.68 in June, up from 57.22 in May. A reading above 50 indicates growth in the sector. The index has consistently registered at elevated levels this year with an average of 59 since January, the best six month stretch since the beginning of 2015. The index averaged 50.9 in the last three months of 2016.

Respondents for the survey-based index produced by the Marquette Center for Supply Chain Management were generally upbeat in their comments. Several noted strong order strength recently, but they also noted some raw material prices have been increasing and there is limited confidence in longer-term forecasts.

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The outlook for the next six months declined slightly from May with the diffusion index, which attempts to balance positive and negative bias, dropping from 68.18 percent to 66.67 percent. The shift was due to more respondents expecting conditions to stay the same instead of improving, although the percentage expecting worse conditions also dropped from 13.64 percent to 8.33 percent.

The employment component of the report remained relatively stable, declining slightly from 65.57 to 65.17. The blue collar index was down from 65.7 to 59.1 while the white collar index dropped from 67 to 55.3. A lack of qualified candidates was among the respondent comments.

Other components of the index were a somewhat mixed bag. New orders were up slightly from 62.77 to 63.77, but production declined from 65.43 to 61.46 and order backlogs were down from 57.5 to 54.55.

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Prices were up by 1.2 to 73.91 and supplier deliveries were slowing, jumping from 49.16 to 64.13. Inventories were down by 3.6 to 39.58, well within declining territory as were customer inventories at 35.71.

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