The Manufacturing Alliance for Productivity and Innovation (MAPI) said that its composite index of activity edged slightly higher, up from 66 in September to 67 in December. After dropping to 55 in the fourth quarter of 2012, manufacturers in the MAPI survey have reported rising levels of sentiment with each quarter in 2013.
Index readings over 50 indicate an expansion, and as such, these data suggest mostly positive trends within the sector. Indeed, the key indicators were encouraging, with strong growth in new orders (up from 70 to 72), shipments (up from 76 to 79), and exports (up from 61 to 67).
Still, there were some areas that weakened in this survey relative to the previous quarter. For instance, capacity utilization dropped from 30.0 percent in September to 27.3 percent in December. MAPI calculates its utilization figure by reporting the percentage of respondents which are operating at above 85 percent of its overall capacity.
The investment data were mostly mixed. Modest gains in U.S. capital spending (up from 53 to 54) was observed, but foreign investments (down from 54 to 41) declined. At the same time, overall research and development spending continued to grow, but at a slower pace (down from 66 to 61).
Overall, though, these data support the notion that manufacturing activity continues to improve, mirroring similar findings from other indicators. As reported last month, MAPI has a generally upbeat outlook for this year. They predict that real GDP will grow 2.6 percent in 2014, up from 1.7 percent in 2013. In addition, they expect manufacturing output to rise from 2.1 percent growth in 2013 to 3.1 percent in 2014.
Chad Moutray is the chief economist, National Association of Manufacturers.