The manufacturing sector in southeastern Wisconsin continued its growth in August, but commentary from industry experts continues to emphasize increasing costs and concerns over looming trade battles.
The latest Marquette-ISM Report on Manufacturing found a Milwaukee-area PMI of 64.63, up from 61.66 in July. Any reading above 50 indicates growth in the sector and the reading has been above 60 for 10 of the last 12 months.
Comments from survey respondents, however, pointed to potential problems, with one respondent saying “many challenges facing supply chain right now.”
“Several projects have been lost due to tariffs on U.S. imports to China,” another comment said.
The respondents also pointed to a shortage of electronic components, increasing lead times, inflationary conditions and “an uphill battle” planning for unplanned costs.
“Even when things are really good, and they’re really good right now demand wise, you can have supply chain pressures,” said Doug Fisher, director of the Marquette Center for Supply Chain Management, which produces the report. “To me, all of these are in the good problem category.”
Fisher said even the short-term pain of tariffs, which has led to increased costs for many companies, could lead to gains over the long-term if the efforts result in a more favorable trade environment.
The outlook for business conditions in the next six months, however, improved. The reports diffusion index – which attempts to balance positive and negative bias – increased from 53 percent to 67 percent. The improvement was driven by a jump in the percentage expecting improved conditions, up from 33 to 47 percent. The percentage expecting things to get worse fell from 28 to 13 percent.
The hiring outlook for blue-collar jobs increased from 49 to 64.4 while white-collar hiring expectations decreased slightly from 57.1 to 56.7.
Other components of the ISM report also saw positive changes with new orders, backlog and production all growing. The pace of growth in prices slowed, but remained at high levels. Supplier deliveries also slowed somewhat.
Read more economic data reports at the BizTracker page.
