Region’s manufacturing growth remains strong despite trade concerns

Milwaukee-area PMI above 60 in June

manufacturing activity

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

The headline numbers in the latest Marquette-ISM Report on Manufacturing show continued strength in the industry, but comments from survey respondents also highlight growing concerns about a trade war and rising prices.

The report’s Milwaukee-area PMI registered 60.18 in June, down from 67.9 in May but still well into positive territory. Any reading above 50 indicates growth in the region’s manufacturing sector. The index has been above 60 five of the last six months and eight of the last 12.

Respondent comments on the survey, however, pointed to concerns over increased tariffs on foreign steel and aluminum and retaliatory tariffs from other countries.

“Tariffs pose a strong risk to business conditions and company operations,” one respondent said.

“Trade discussions are creating uncertainty and rising costs,” another said.

The report’s six-month business outlook showed signs of businesses increasing fears on trade. The percentage of respondents expecting worse conditions in the future increased from 7 percent in May to 29 percent in June. At the same time, the percentage expecting improved conditions fell from 57 percent to 41 percent and the number expecting things to remain the same dropped from 36 percent to 29 percent.

The result was a downward shift in sentiment with the diffusion index – which attempts to account for positive and negative bias – declining from 75 percent to 55.9 percent.

Respondents also expressed concerns about the tight labor market. Some said the availability of trucks and drivers is an ongoing issue while others said there is a shortage of skilled labor. The result is rising costs across the industry.

Read more economic data reports at the BizTracker page.

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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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