Key measure of US manufacturing falls in Q1 for 7th decline

12 April 2012 19:01  [Source: ICIS news]

WASHINGTON (ICIS)--A key measure of US manufacturing declined slightly in the first quarter, the seventh consecutive quarter-on-quarter decline since June 2010 and an indication that manufacturing growth is slowing, a trade group said on Thursday.

The Manufacturers Alliance for Productivity and Innovation (MAPI) said that its survey of manufacturing industry senior financial officers suggests “an overall picture of continued growth for the industrial sector, but at a more moderate pace during 2012”.

The survey measures sentiment among top manufacturing financial executives on 13 business conditions – such as current orders, exports, profits and capacity utilisation – to create a composite business outlook index.

MAPI said that the index fell by one point in the first three months to 65 from the 66 reading in the fourth quarter.

That marks the seventh consecutive quarterly decline since the index’s recent high of 81 in the second quarter of 2010, a year after the US recession’s official end in June 2009.

However, MAPI senior economist Donald Norman noted that at 65, the index is still well above the midpoint of 50, the dividing line between industrial growth and decline.

A reading above 50 indicates that manufacturing is expanding, while a number below that threshold shows that manufacturing is in contraction.

Norman said that although the index has been easing downward for seven quarters, many of the underlying business activity measures have gained since the fourth quarter last year, “providing support for the view that expansion will continue, even if at a more modest pace”.

The MAPI composite business outlook index is seen as an historically accurate near-term preview of business prospects for the US manufacturing sector.

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

By: Joe Kamalick
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