US manufacturing sector sees second quarter of improvement

11 July 2013 21:40  [Source: ICIS news]

WASHINGTON (ICIS)--A key survey indicated on Thursday that the US manufacturing sector made moderate but significant gains in the second quarter this year, marking another quarterly improvement after ten consecutive quarterly declines.

In its latest quarterly report, the Manufacturers Alliance for Productivity and Innovation (MAPI) said that its composite business outlook index (CBOI) rose to 58 for the second quarter from the 56 reading in the first three months of this year.

In its survey of senior financial officers in major industries, 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 second-quarter survey results, said MAPI, “point to a degree of renewed momentum in manufacturing activity over the next three to six months”.

The nation’s manufacturing sector includes petrochemical and downstream chemicals producers, and the broader industry is a key downstream consumer of chemicals and resins.

“The improvements in the composite index and a number of individual indexes, though modest, are encouraging given that the manufacturing sector had slowed”, at the end of 2012 and the first month or so of this year, said Donald Norman, MAPI senior economist.

Among the 11 subsidiary indexes, there were second-quarter improvements in the backlog of manufacturing orders, a boost in current orders and a gain in capacity utilisation, MAPI said.

On the downside, MAPI said manufacturers’ profit expectations declined in the second quarter, and surveyed executives said they expect US interest rates to rise in the third quarter this year.

In addition, said MAPI, “a minor area of concern was the annual orders index, which is based on a comparison of expected orders for all of 2013 compared with orders in 2012”. That measure decreased to 64 in the second quarter from 74 in the first three months of this year “but remains at a relatively high level”.

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

By: Joe Kamalick
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