US manufacturing grows, but pace has slowed over 4 quarters

14 July 2011 18:04  [Source: ICIS news]

WASHINGTON (ICIS)--The US manufacturing sector continues to expand but at a slower pace than last year and the rate of growth has declined for four straight calendar quarters, a key industry survey said on Thursday.

The Manufacturers Alliance said that its quarterly survey of its members’ senior financial executives showed that the composite index of manufacturing declined to 68% in the second quarter ended 30 June, four points lower than the 72% measure recorded for the first quarter this year.

The manufacturing composite index is made up of data on shipments, backlog orders, inventories and profit margins along with such subsidiary indicators as research and development (R&D) spending, export orders, capital spending plans and new orders.

A composite index above 50% means that the nation’s manufacturing sector is in expansion, while a reading below that midpoint signals industry contraction.

US manufacturing - which includes such majors as autos and durable goods among others - is a crucial downstream consuming sector for the nation’s petrochemicals producers and downstream chemical makers.

Although the index has held above 50% for seven consecutive quarters, the alliance noted, the second quarter decline marks the fourth straight quarter of lowering expectations and performance among manufacturing industries.

The alliance noted in particular that the new orders index experienced a double-digit drop in the second quarter compared with the same period last year, falling by 12 points from 91% in April-June of 2010 to 79% in the quarter just ended.

However, alliance economist and survey manager Donald Norman said that with the composite index at 68% for the second quarter, “overall manufacturing sector activity remains fairly robust even if the rate of expansion is slowing”.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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