The Manufacturers Alliance for Productivity and Innovation (MAPI) announced that its composite index of manufacturing activity edged slightly lower from 66 in the fourth quarter of 2011 to 65 in the first quarter of this year. This index has eased considerably over the course of the past year or so, as it stood at 72 this time last year.

Yet, it is hard to get too worked up over this easing, especially since readings over 50 suggest expansion. The senior financial executives who complete this survey clear remain positive overall, with manufacturing continuing to grow strongly.

Looking at the various components of the index, there are clear reasons for optimism moving forward. Measures for new orders and exports were higher, while profit margin growth remains solid. MAPI estimates that manufacturing activity will increase by 4 percent in 2012, with a 3.6 percent gain in 2013.

Moreover, second quarter shipments, capital investment and R&D spending are also expected to increase, according to their forward-looking indices. This is especially true from the international perspective.

The survey asked a series of questions about earnings. All but 16.9 percent of respondents said that their earnings in the last three months had either stayed the same or improved. Earnings are expected to increase in 2012 in all regions of the globe, with the Eurozone experiencing the slowest growth rate. Growth in the U.S. market appears to be key to many manufacturers’ growth plans. 

Chad Moutray is chief economist, National Association of Manufacturers.

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