MAPI: Manufacturing Optimism Eases on Increased Uncertainty

By July 12, 2012Economy

The Manufacturers Alliance for Productivity and Innovation (MAPI) said that its composite index of manufacturing activity eased from 65 in the first quarter of 2012 to 61 in the second quarter. Interestingly, this index has slipped every quarter since the second quarter of 2010, when it stood just above 80. Even with this month’s decline, the measure remains over 50, suggesting continued expansion for the sector, albeit one that is growing more slowly.

New orders were the largest drag on this quarter’s index, down from 77 to 70, essentially the level that it was in the fourth quarter. Shipments also slowed somewhat, falling from 83 in the fourth quarter to 77 in the first and 75 now. Exports have been impacted by struggles overseas, with both new export orders and overseas shipments lower. New export orders, for instance, dropped from 79 to 63 for the quarter.

In addition to these figures, another troubling sign was the drop in the capacity utilization index, which decreased from 40.0 to 35.2. This suggests that just 35 percent of manufacturing firms are operating above 85 percent of their capacity.

The MAPI survey, for the most part, mirrors other indicators which have shown the manufacturing sector slowing of late. In the recent NAM/IndustryWeek survey manufacturers ranked the unfavorable business environment as their number one concern and we are certaintly seeing that in other recent surveys and indicators. Until Washington acts ton pro-growth policies uncertainties about current and future economic growth will continue to weigh heavily on manufacturers’ minds.

Chad Moutray is chief economist, National Association of Manufacturers.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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