Sector shows contraction in February

A key measure of Milwaukee-area manufacturing activity indicated contraction in February. The Purchasing Managers Index was below 50 for the first time in six months, according to the Marquette ISM Report on Manufacturing.

The report showed the PMI registered at 48.59 in February, down from 52.82 in January and 54.27 in December. 

Any reading above 50 indicates growth, while below 50 suggests contraction. February marked the first month in the last six months with a PMI value of below 50.

February survey respondents said: 

  • “There are no near term commodity or service issues affecting our supply chain. Most cost drivers are stable/unchanged.”
  • “This is our seasonal slow period”
  • “Rail traffic is very slow and congested. There are much longer than normal transit times, which are causing shortages and reductions in production.”
  • “U.S. weather having impact for on-time delivery of incoming material.”
  • “Some early excitement for China exports tempered by late February as orders pulled back.”

Prices and exports were growing in February. PMI, new orders, production, customers’ inventories, supplier deliveries and backlog of orders were slower or declining last month. 

Blue collar employment was declining in February, while white collar employment was growing. 

Average lead time for capital expenditures increased by six days to 99 days, average lead time for production materials remained constant at 37 days and average lead time for maintenance, repair and operating supplies decreased by one day to 20 days. 

In the six month outlook on business conditions, about 32 percent expect positive conditions, down from about 40 percent in January. About 50 percent expect the same conditions, up from about 40 percent in January. And about 18 percent expect worse conditions, remaining constant from January.

Responses regarding the outlook included: 

  • “Very slow start to 2014”
  • “Little confidence in numbers past 90 days”
  • “Economic growth remains sluggish”
  • “Stable order cycles, announced new customer programs”

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