Southeastern Wisconsin manufacturing continued to contract in June

There was little change in the direction of the southeastern Wisconsin manufacturing sector in June, according to the latest Marquette-ISM Report on Manufacturing.

The Milwaukee-area PMI, the report’s headline number, dipped slightly from 43.7 in May to 43.5 in June. Any reading below 50 indicates the sector is contracting while those above that level suggest growth.

The index had trended down for much of 2019, but showed improvement at the end of the year and moved into positive territory in January.

However, the impact of the coronavirus on global supply chains started to appear in February and March. By April, the index plummeted to 35.7 before rebounding somewhat in May.

June’s report did show some positive signs. The rate of decline in new orders slowed, production improved and exports picked up slightly.

Respondents also continued to have a more optimistic outlook for business conditions over the next six months. The report’s diffusion index, which balances positive and negative bias, improved from 57.1% in May to 62.5% in June. In April, the index was at 38.2%.

The shifting outlook has gone from a plurality, 47.1%, of survey respondents, in April expecting conditions to get worse to now 50% expecting things to get better in the June report. In May, a plurality, 42.9%, expected things to stay the same.

Respondent comments in the monthly report, however, showed a slightly different picture.

One respondent said the economy has bottomed out and businesses is slowly increasing. Another said the consensus from customers is that the worst is yet to come.

A third respondent summarized the uncertainty companies are facing: “Demand reductions are beginning to level off but there is not a reliable demand forecast for the remaining of 2020.”

One respondent said recovery would take 18 months in the U.S. and even longer in Europe, India and Brazil.

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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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