US manufacturing sector continues to recover - survey

13 January 2011 16:23  [Source: ICIS news]

WASHINGTON (ICIS)--Recovery in the US manufacturing sector is continuing at a steady although slightly slower pace, a leading survey reported on Thursday, marking what was termed an impressive 21-month turnaround from the industry’s recession low-point.

The Manufacturers Alliance said that its quarterly survey of executives in the broad manufacturing sector showed its composite index at 75% in the fourth quarter 2010, the fifth consecutive quarter that the business gauge has been above the 50% threshold.

A reading above 50% means that the country’s manufacturing industries are expanding, while a reading below that midpoint signals contraction.

The 75% composite index for the fourth quarter was down slightly from the 77% reading seen in the third quarter survey, the alliance noted, suggesting that the pace of expansion has slowed but remained strong.

“The current index is a dramatic improvement from the record low 21% recorded in the March 2009 survey,” the alliance said, “signalling that an impressive turnaround for industry continues.”

The alliance’s composite manufacturing index reflected survey data collected in 12 subsidiary business measures, such as capacity utilisation, domestic orders, exports, inventories, research and development (R&D) spending and profit margins, among others.

“The trends in the composite index and in the individual indexes are remarkable in that most were little changed from their September [third quarter 2010] levels as they continue to remain at relatively high measures,” said alliance economist and survey coordinator Donald Norman.

“The takeaway from this quarter’s survey is ‘steady as she goes’, although the rise in the inventory index suggests that the pace of expansion has slowed,” Norman said.

Of particular note was an increase in the index for R&D spending, which rose to 73% in the fourth quarter from the third quarter measure of 70%.  The alliance said that index gain suggested that manufacturers expect to spend more on research and development this year than they did in 2010.

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