A Positive Report for Manufacturing Amid the Uncertainty

By September 2, 2010Economy

The Milwaukee Journal-Sentinel, which diligently covers manufacturing and Wisconsin industry, today reports on the latest Institute for Supply Management’s manufacturing report and the condition of the state’s manufacturers in “U.S. manufacturing strengthened in August.”  

ISM’s manufacturing index rose to 56.3 percent in August, up from 55.5 in July, and manufacturing has expanded for 13 straight months, indications that a “double-dip” recession is unlikely. Still, mixed signals.

Business has not rebounded to pre-recession peaks, but it’s much better than it was in 2009, said Dave Sucharski, general manager of Miro Tool & Manufacturing Inc., in Waukesha.

“Right now, all of the sectors of our company are busy,” he said. “The only downside is that orders are coming in with very short lead times.” To conserve cash, “customers are ordering things just when they need them,” he said, “and sometimes later than that.”

JS reporter Rick Barrett also notes points raised in the NAM’s Labor Day Report for 2010, released Wednesday.

“We have had four consecutive quarters of economic growth, but much of the increase was temporary in nature,” said David Huether, chief economist for the National Association of Manufacturers.

“More than half of the upturn in the economy over the past year was from business restocking inventories. Now, with inventory-to-sales ratios back to reasonable levels, this source of growth will likely fade,” Huether said.

The NAM’s Labor Day report is available at http://bit.ly/LaborDayReport .

The ISM index — available here — rose by an unexpected amount, which sparked probably too enthusiastic of reports about the economy, e.g., the Wall Street Journal blog entry, “Surprising Many, Manufacturing Is Bright Spot.” Congress is back soon, and could easily tarnish that brightness.

As NAM President John Engler wrote in the introduction to the Labor Day report:

Any serious Labor Day analysis of the U.S. economy and employment must address the uncertainty factor. Costly tax and regulatory proposals enacted or being considered by Congress and the Obama Administration make employers apprehensive, investors cautious and consumers anxious. Policies that expand government, taxes and regulations also pose serious questions about the ability of business in the United States to compete in the global marketplace. The predictable result is a faltering recovery and troubling times for U.S. workers.

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