Key measure of US manufacturing edged down in Q4 2011

12 January 2012 19:19  [Source: ICIS news]

WASHINGTON (ICIS)--A key measure of US manufacturing activity edged down in the fourth quarter 2011, a leading production trade group said on Thursday, noting that while overall growth will continue, the pace will moderate through the first half of this year.

In its quarterly survey of US production industries, the Manufacturers Alliance for Productivity and Innovation (MAPI) said that its composite index of manufacturing fell slightly in the fourth quarter to 66 from the 67 level recorded for the third quarter.

That decline marked the sixth straight quarterly drop for the index.

Launched in 1991, MAPI’s composite business outlook index is a weighted sum of US manufacturing shipments, backlog orders, inventories and profit margins.

An index reading above 50 means the manufacturing sector is expanding, and a measure below that midpoint means that the industry is in contraction.

The US chemicals sector is part of overall manufacturing, and many other production industries are important downstream consumers of chemicals and resins, either in processing or as end product components.

Donald Norman, MAPI economist and survey coordinator, noted that “despite the sixth straight decrease from the record high of 81 in June 2010, the index remains consistently high, averaging 70.8 during that period”.

“Despite the challenges posed by slower economic growth and continued problems in the construction and financial sectors, the manufacturing sector is the ‘Energizer Bunny’ of the US economy,” Norman said.

“Barring a meltdown in the euro zone, the US manufacturing sector should continue growing at a moderate pace heading into 2012,” he said.

But the impact of Europe’s already developing recession and the potential threat of a deepening euro zone financial crisis are a concern among manufacturing executives surveyed by MAPI.

Norman said that 44% of the executives said that the rate of growth in their exports to the euro zone has slowed, and 16% said their exports to the region are in decline.

He said that 97% expect the euro zone will experience a recession this year, “with views almost evenly split as to whether the recession would be mild or moderate”.

In addition, 95% of the surveyed executives said the euro zone crisis has led to negative impact on revenues and profitability, “although most characterise this impact as minimal”.

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

By: Joe Kamalick
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