Posted January 13, 2011
MAPI survey: Manufacturing expansion slowing
The latest quarterly survey from the Manufacturers Alliance/MAPI, suggests the pace of expansion may be slowing among the nation's manufacturers.
The survey's composite index is a leading indicator for the manufacturing sector. The December 2010 composite index fell slightly to 75 percent from 77 percent in the September 2010 report. This is the fifth consecutive quarter the index has been above the 50 percent threshold, the dividing line that separates contraction and expansion.
The current index is a dramatic improvement from the record low 21 percent recorded in the March 2009 survey, signaling that an impressive turnaround for industry continues.
"The trends in the composite index and in the individual indexes are remarkable in that most were little changed from their September levels as they continue to remain at relatively high levels," said Donald A. Norman, Ph.D., MAPI economist and survey coordinator. "The takeaway from this quarter's survey is 'steady as she goes,' although the rise in the inventory index suggests that the pace of the expansion has slowed."
The business outlook index is a weighted sum of U.S. shipments, backlogs, inventories, and profit margin indexes. In addition to the composite index, the survey includes 12 individual indexes. Most of the individual indexes changed very little between September and December.
The capacity utilization index, based on the percentage of firms operating above 85 percent of capacity, improved to 33.3 percent in the current survey from 28.1 percent in September. In addition to continuing its upward trend since reaching a record low of 7 percent in December 2009, the index is now above the long-term average utilization rate of 32 percent.
The non-U.S. prospective shipments index, which measures expectations for shipments abroad by foreign affiliates of U.S. firms in the first quarter of 2011 compared to the same quarter of 2010, improved to 89 percent from 84 percent. The annual orders index, based on a comparison of expected orders for all of 2011 with orders in 2010, increased to 90 percent in the December survey from 86 percent in September.
The research and development (R&D) index reflects the views of survey participants regarding R&D spending in 2011 compared to 2010. The R&D index was 73 percent in December, slightly above the 70 percent in the September 2009 report.
The backlog orders index, which compares the fourth quarter 2010 backlog of orders with the backlog of orders one year earlier, advanced to 83 percent in December from 81 percent in September. An accumulation of backlogs usually occurs when new orders exceed shipments. The non-U.S. investment index, based on expectations regarding capital expenditures abroad in 2011, was solid at 75 percent in December compared to an already strong 73 percent in September.
