Sector surges in September

Milwaukee’s manufacturing industry saw a significant increase in activity in September, according to the latest report from the Institute for Supply Management-Milwaukee.

The Marquette-ISM Report on Manufacturing showed the PMI, a measure of manufacturing growth, registered at 55.0 in September, up from 48.21 in August.

Any reading above 50 indicates growth, while below 50 suggests contraction. The index has been yo-yoing over the last several months, and was at 52.43 in July.

The indices for new orders, production, employment, prices, backlog of orders, exports and imports were growing in September, while supplier deliveries, inventories and customers’ inventories were growing slowly or declining.

Both blue collar and white collar employment were growing in September. Regarding employment, those surveyed said:

  • “With the increase in commercial construction we are starting to see an increase in orders.”
  • “Our blue collar workforce is being reduced through attrition; white collar through reorganization.”
  • “With the increase in new orders we are in the process of hiring new employees. The hiring and training for these employees will take several months.”

Most commodities prices held steady in September, though beef and pork prices were high.

Manufacturers reported the average lead time for capital expenditures was up eight days, to 85 days. The average lead time for production materials was down nine days, to 29 days. And the average lead time for maintenance, repair and operating supplies was down three days, to 15 days.

A six-month outlook survey showed manufacturers’ predictions have vastly improved. About 41 percent expect positive conditions over the next six months, up from 20 percent in August. Nearly 41 percent expect the same conditions, down from 58 percent and 18 percent expect worse conditions, down from 20 percent.

Respondents reported, about the outlook: “We see an increase in commercial construction, hotels, manufacturing plants, schools and hospitals,” “No outlook for broad demand increase,” “Economy remains sluggish,” “Seasonal downturn,” “Business is flat. We do not expect it to change anymore this year.”

Overall comments for September included:

  • “The greatest supply chain issue facing our company is the lack of forecast given to us by the sales department. This will be a short term problem as, moving forward, sales representatives will be required to report quoting activity. This will give us a much better outlook for how sales will be impacting the company in the future and allow our purchasing department to plan accordingly. Additionally, it will enable our production control department to start increasing capacity in advance.”
  • “Pricing and commodity markets were stable during the month and there were no noteworthy supply chain issues.”
  • “Our lead times have increased so we need to increase our capacity.”
  • “We have a new rep/partner and are increasing our foreign sales opportunities.”
  • “Customers appear to be drawing down their inventories, relying on shorter lead times.”
  • “(We are seeing a) drop in short lead time orders.”

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