Region’s manufacturing growth slows amid tariff, pricing concerns

Marquette ISM shows lowest reading since August 2017

manufacturing activity

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

The southeastern Wisconsin manufacturing sector saw growth slow in September as concerns over tariffs, increasing prices and limited inventories continued to mount, according to the latest Marquette-ISM Report on Manufacturing.

The report found a Milwaukee-area PMI of 56.16. Any reading above 50 indicates growth in the sector, but the September number was down nearly 8.5 points from August. It was the lowest reading since August 2017 and just the second time in the last year the index has been in the 50s.

One respondent said the recently implemented tariffs by President Donald Trump on $200 billion worth of goods from China will “kill us” adding 90 percent of the company’s goods are produced in the Asian country.

Another respondent said costs are continuing to increase.

“Some of the increases are listing the reason as tariffs that have been imposed in 2018,” the respondent said. “I hope this is a short-term issue. If it becomes a long-term issue, I should be able to find suppliers that use domestic materials at competitive prices.”

Tariffs were not the only concern cited by respondents, they also pointed to a shortage of trucks and drivers and difficulty finding manufacturing labor.

Looking ahead, the diffusion index for the six-month business outlook dropped from 66.7 percent in August to 50 percent in September. The index tries to remove bias toward positive or negative sentiment among respondents.

The drop was driven by a sharp decrease in number of respondents expecting improved conditions, down from 46.7 percent to 22 percent. The number expecting things to get worse also increased from 13.3 percent to 22.2 percent.

“Current order book is holding but 2019 forecast is very unclear,” said one respondent. “Customers holding tariff impacts back from their end users until year end – may trigger slow down.”

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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