Good news is hard to find: Manufacturing reports show weakness

The March and April reports on manufacturing showed in charts and graphs what most manufacturing professionals already knew.
By Plant Engineering Staff May 15, 2008

The March and April reports on manufacturing showed in charts and graphs what most manufacturing professionals already knew. The manufacturing sector is continuing to have both its output and outlook battered by struggles with energy and economic issues.

April’s report from PricewaterhouseCoopers showed dwindling optimism in the consultancy’s quarterly Manufacturing Barometer. Only 12% of senior executives were optimistic about the U.S. economy over the next year. That’s a drop from 57% just one year ago, and from 29% just last quarter.

“We knew industrial manufacturers were feeling the pressures of the economic downturn; however, the reality of the situation really hit us when we saw this quarter’s findings,” said Barry Misthal, partner and industrial manufacturing sector leader at PricewaterhouseCoopers. “We expect confidence will remain low for much of 2008, but we are hopeful that the sector will begin to look up as 2009 approaches.”

More than two-thirds of executives cited oil and energy prices as a potential barrier to growth over the next 12 months.

Other key sources of anxiety cited include lack of demand (62%), the monetary exchange rate (57%) and decreasing profitability (48%).

The one bit of brighter news was that the weaker dollar offered opportunities for industrial manufacturers on a global basis. For full details of the report, go to www.pwc.com/manufacturing.

They also tried to find some good news in the quarterly Manufacturing Alliance/MAPI report of manufacturing, but there wasn’t a lot to find.

The composite index dropped almost 13% in March, from 64 to 57, matching the double-digit losses found in many of the sectors that make up the report. While any score above 50 indicates an increase in the next two quarters, the drop put the index at its lowest level since December 2006.

The U.S. investment index, which asks about capital investments, dropped from 74% to 62% in March, while the order backlog index fell from 67% to 55%. The shipments index also dropped by 12 percentage points, from 74% in December to 62% in March.

MAPI analysts said the drop in inventory indicates manufacturers are “reining in inventory growth.”

More details of the study can be found at www.mapi.net .

No good numbers

12% Percentage of manufacturing executives optimistic about the U.S economy’s future.

68% Percentage of executives who feel energy costs are their biggest barrier to growth

13% Decline in Manufacturing Alliance/MAPI index of manufacturing confidence. The index fell from 64 to 57, its lowest level in two years.