US manufacturers slightly more optimistic, but still uncertain

11 April 2013 18:52  [Source: ICIS news]

WASHINGTON (ICIS)--Economic expectations among US manufacturing executives improved marginally in the first quarter, a key survey reported on Thursday, but chiefly because of increased profits while prospects fell for new domestic and overseas orders.

In its quarterly survey of senior financial officers in major industries, the Manufacturers Alliance for Productivity and Innovation (MAPI) records their expectations in 11 business measures, such as current orders, order backlogs, profit margins, exports, capital investment plans and utilisation, among others.

The cumulative results of executives’ responses to those 11 areas of inquiry make up the composite index, regarded as a reliable leading indicator for the US manufacturing sector.

The MAPI composite index for the first quarter this year rose marginally to 56 from the fourth quarter measure of 55.

While narrow, the first quarter index gain is seen as significant because it breaks a string of 10 consecutive quarterly declines.

But the improvement in the first quarter could be tenuous, MAPI said.

“The survey results offer a mixed bag,” said MAPI chief economist Donald Norman.

“On the positive side, the composite index ended a long slide, and there is good news in the upswing in the investment indexes and in the profit margin indexes,” he said.

However, Norman noted: “Most of the other indexes – including current orders, prospective shipments, exports, backlog orders and capacity utilisation – all fell.”

So while manufacturers’ profit expectations are improving, and they expect to invest more in their domestic and overseas operations, they are not anticipating any significant improvement in business, according to the survey results.

“The outlook over the next three to six months remains the same,” said Norman, “growth at a slow pace.”

Among the subsidiary index measures that worsened in the first quarter, MAPI said that more executives think that interest rates soon will begin to rise.

“The interest rate expectations index increased to 58 from 51,” MAPI said, “indicating that a growing majority believes that longer-term interest rates will rise by the end of the second quarter of 2013.”

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

By: Joe Kamalick
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