US manufacturers report strong signs of recovery, growth expected

14 January 2010 20:03  [Source: ICIS news]

WASHINGTON (ICIS news)--A new survey of US manufacturers gives the strongest indication to date that the nation’s manufacturing sector is on the upswing and the long-awaited recovery may be in sight, an industry group said on Thursday.

The Manufacturers Alliance said that its December survey of manufacturing activity for the fourth quarter last year “indicates that overall manufacturing activity is expected to grow over the next three to six months”.

The broad US manufacturing sector is an important downstream consumer of a wide variety of chemicals and resins, so improving expectations among general manufacturing executives also suggests near-term business improvement for the chemicals sector.

The alliance’s survey of key manufacturing industry executives measures performance and planning in 12 categories such as prospective domestic shipments, export orders, capital investment plans and research and development (R&D) spending.

The 12 measures combined make up the alliance’s quarterly business outlook index for manufacturing.

The composite business outlook index rose to 57% in the December survey, compared with 38% in the third-quarter survey completed in September, the alliance said.

That 57% rating is the highest level since March 2008, when the survey also produced a 57% measure, and the December index marks the first time in six quarters that the reading has been above 50%.

The alliance said that 11 of the 12 business activity measures showed improvement in the December survey of manufacturers, with 10 gauges showing double-digit gains.

Among the 12 index components, the US prospective shipments measure, which reflects expectations of first-quarter 2010 business compared with first quarter 2009, rose to 59% in December from the 30% level found in the September survey.

Expectations for export orders also have improved among manufacturing executives, the alliance said, with fourth-quarter 2009 exports increasing to 47% compared with the 19% measure seen in September’s third quarter survey.

Manufacturers also reported strong gains in their backlogs of unfilled orders, with new orders for manufactured goods running well ahead of shipments.

The manufacturing executives also expressed increased confidence in near-term business prospects, as evidenced by their responses to survey questions about capital investments and R&D budgets, the alliance said.

The US investment index, which measures executives’ plans for capital improvements in 2010, rose to 66% in the December survey compared with the 47% measure reported in September last year.

R&D spending plans for 2010 generated a 66% index reading compared with a 49% reading when the survey was last done in September.

Donald Norman, the alliance's economist and survey coordinator, said the data gathered in the December survey “provides the strongest indication to date that the manufacturing sector is on the upswing”.

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