Region’s manufacturing sector continues growth, but production lost to COVID-19

Last updated on December 3rd, 2020 at 01:53 pm

Southeastern Wisconsin’s manufacturing sector continued to grow in November, but companies also increasingly ran into issues with employees losing time to COVID-19 quarantines and sick days, according to the latest Marquette-ISM Report on Manufacturing.

The Milwaukee-area PMI came in at 61.96 for the month, up from 59.42 in October. A reading above 50 suggests the region’s manufacturing sector is growing.

November marked the fourth straight month of readings above 50 and the region is averaging 52.6 for the last six months.

The index had languished below 50 for much of 2019 as the manufacturing sector dealt with the fallout from trade conflict with China. It topped 50 in January for the first time in six months but dipped below in February as the COVID-19 pandemic took hold and then plummeted to 35 in April amid government-ordered shutdowns.

In the latest report, respondents were generally optimistic about conditions. New orders, backlog and exports all increased and were well above 50.

The business outlook diffusion index, which attempts to balance positive and negative bias, dipped slightly from 67.9% to 61.1%. The shift was driven by a drop in the number of respondents expecting business conditions to improve in the next six months from 50% in October to 38.9% in November. The percentage expecting things to be the same increased from 35.7% to 44.4%. The number expecting things to get worse was up slightly at 16.7% compared to 14.3%.

One area of concern for respondents was the availability of labor.

“Significant loss of production due to COVID quarantine and sick days – human capital is a continued issue that is not forecastable,” one respondent said.

“Labor continues to be one of the largest problems related to timing,” another said. “Sick days and quarantine times have caused havoc on last minute delays.”

Another said businesses are retaining all employees even with reduced order volumes.

“At one point this will become unsustainable,” the respondent said.

At the same time, another respondent said they were trying to replenish inventories but customer demand was consuming it faster than it could be restocked.

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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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