FREE SUBSCRIPTION Includes: The Advisor Daily eBlast + Exclusive Content + Professional Network Membership: JOIN NOW LOGIN
Skip Navigation LinksHome / Articles / Read Article

Print

Manufacturers Business Outlook Index Slips Slightly

By:
Date: Jan 11, 2013 @ 07:10 AM
Filed Under: Manufacturing

The results of the quarterly Manufacturers Alliance for Productivity and Innovation (MAPI) Survey on the Business Outlook (EO-118) indicate little change from the previous report—namely that the sector continues to grow, but at a nominal pace as it confronts ongoing challenges.

The survey’s composite index is a leading indicator for the manufacturing sector. The December 2012 composite index fell to 55 from 56 in the September 2012 survey. Despite the decline—its 10th straight since reaching a record high of 81 in June 2010—the index remains above the threshold of 50, the dividing line that separates contraction and expansion. The drop of only 1 percentage point may portend some stabilization, and is below the fairly significant 5 percentage point drop in the September survey, the largest over the 10-quarter decline.

“Movements in the individual indexes were mixed, but most of the forward looking indexes showed some, if marginal, improvement,” said Donald A. Norman, Ph.D., MAPI senior economist and survey coordinator. “The rapid slowdown in the growth of manufacturing production that began in March 2012 appears to have bottomed out and the outlook is for slow expansion over the next three to six months.”

The Composite Business Outlook Index is a weighted sum of the Prospective U.S. Shipments, Backlog Orders, Inventory, and Profit Margin Indexes. In addition to the composite index, which reflects the views of 55 senior financial executives representing a broad range of manufacturing industries, the survey includes 13 individual indexes that are split between current business conditions and forward looking prospects.

Overall, 6 of those 13 indexes decreased, including 4 of the 6 current business condition indexes, and 1 remained flat.

The Capacity Utilization Index, which shows the percentage of firms operating above 85 percent of capacity, was a bright spot, climbing to 31.5 percent in December from 28.8 percent in September. It is near its long-term average of 32 percent.

The Current Orders Index, a comparison of expected orders in the fourth quarter of 2012 with those in the same quarter one year ago, remained at 57 from the previous survey. The Backlog Orders Index, which compares the fourth quarter 2012 backlog of orders with that of one year earlier, fell to 45 from 53 in the September report. The Profit Margin Index also slipped, to 59 in December from 67 in September.

Based on a comparison of inventory levels in the fourth quarter of 2012 with those in the fourth quarter of 2011, the Inventory Index dropped to 54 in December from 58 in September, a sign that manufacturers are paring inventories in response to slowing growth. The Export Orders Index, which compares exports in the fourth quarter of 2012 with the same quarter in 2011, also saw a slight decline, to 49 in the current survey from 53 in the previous report.

Five of the seven forward looking indexes showed improvement.

Read the full press release.

Download the December Manufacturers Alliance for Productivity and Innovation (MAPI) Survey on the Business Outlook.




Comments From Our Members

You must be an Equipment Finance Advisor member to post comments. Login or Join Now.