September manufacturing reports show growth, stability

Three major indexes that look at manufacturing strength all continued to show a steady upward tick during September.

November 12, 2010

Three major indexes that look at manufacturing strength all continued to show a steady upward tick during September.

The Manufacturing Alliance/MAPI report showed that while manufacturing growth in September slipped from the 81% mark in June to 77% in September, the growth rate was still well above the 50% benchmark for growth. It was the fourth straight quarter of growth, leading MAPI economists to conclude, “the U.S. manufacturing sector has held up well during an uneven economic recovery and should continue to expand, but likely at a slower pace.”

The September 2010 rate was a 30% improvement from the September 2009 numbers, indicating a continued firming of the manufacturing sector.

The September MAPI report also surveyed executives are about their outlook for next year, and again the results were encouraging. The U.S. investment index was at 80% this year, almost double the 47% rate a year ago. The non-U.S. investment index was 73%, well ahead of the 52% rate in 2009.

One component, the profit margin index, reached a record high of 87% in September, above the 78% in MAPI’s June report and surpassing the previous all-time high of 82% in the March 2006 survey. The capacity utilization index, based on the percentage of firms operating above 85%  of capacity, improved to 28.% in the current survey from 20% in June. While still below the long-term average utilization rate of 32%, it extends an upward trend for an index that had reached a record low of 7% in December 2009.

The National Electrical Manufacturers Association’s electroindustry business environment showed a slight decline in business conditions in October, but an improvement in expectations for future conditions.

The Electroindustry Business Confidence Index (EBCI) for current North American business conditions fell to 48 from 53.6 in September. A reading above 50 indicates more panelists than not reported conditions improved during the month, while a reading below 50 indicates more panelists than not reported conditions deteriorated.

However, the EBCI for North American conditions six months in the future climbed for a second straight month. The index reached 68, up from 66.1 in September and 54 in August, and continues to indicate that more panelists than not expect the business environment to improve over the next six months.

And on the manufacturing technology front, September U.S. manufacturing technology consumption totaled $399.76 million, according to the American Machine Tool Distributors’ Association and the Association For Manufacturing Technology.

The figure was up 66.1% from August and up 156.8% when compared with the total of $155.69 million reported for September 2009. With a year-to-date total of $2,090.27 million, 2010 is up 74.1% compared with 2009.
“September 2010 was a watershed in the recovery from the recession of 2008 and 2009. The 1,992 units sold this month is the highest number since September of 2008 and demonstrates the resilience and staying power of the U.S. manufacturing base,” said Peter Borden, AMTDA President.  “More remarkably, this was done while many factories are running below the capacity levels that require capital goods purchases, despite the tight credit, and in spite of questions about government debt and potential tax increases. The catalysts of the successful IMTS, the weaker dollar, and the passage of bonus depreciation paid surprising and long awaited dividends.”