MAPI reports show growing pressure, but steady growth

Two reports released by the Manufacturers Alliance/MAPI show the manufacturing sector continues its slow growth, but that continuing pressures of government regulation and taxes are proving a drag on such growth.

The quarterly Manufacturers Alliance/MAPI Survey on the Business Outlook in September showed a composite index of 66, down from the previous quarter total of 68, but a figure the report says is still historically high. A composite business index above 50 indicates that overall manufacturing activity is expected to increase over the next three months.

While still maintaining an optimistic view, the current index shows a marginal loss of momentum for a sector beset by a host of recent challenges, including natural disasters and rising energy costs. The current reading is the lowest since a composite index of 60 in June 2003, covering nine surveys, and down from the all-time high of 80 in June 2004.

“Although the composite and most individual indexes slipped from their June levels, they remain at relatively high levels and point toward expansion over the next three months and in 2006 as well,” said Don Norman, Ph.D., Manufacturers Alliance/MAPI Economist and survey coordinator. “That there was some slippage in the indexes is not surprising given that the responses to this quarter’s survey were made after Hurricane Katrina and the ensuing spike in oil and natural gas prices. What is significant is that the senior financial executives participating in the survey continue to be optimistic regarding the outlook for the manufacturing sector.”

In another study from by the Manufacturing Institute and the Manufacturers Alliance/MAPI, manufacturing profits in five key sectors were 67% lower than they would have been from 2000 to 2003 because of adverse structural costs.

“Profit rates for durable goods and chemical manufacturing continue to be dramatically lower than their historic norm, primarily because of escalating domestic costs and intense international competition,” said Jerry Jasinowski, president of the Manufacturing Institute.

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