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.

In an open letter introducing the National Association of Manufacturers’ 2009 Labor Day Report, NAM President John Engler warned that a nascent economic recovery could easily be reversed. Below is the text of the John Engler letter, “Policies will determine whether U.S. will experience recovery or reversal,” and the full report is available here.

Labor Day 2009 arrives just as the U.S. economy shows signs of reviving from the deepest, lengthiest and most painful economic downturn since the Great Depression.

With this report, the National Association of Manufacturers (NAM) documents the harsh conditions that have plagued the U.S. and global economies during this financial crisis and recession. Consumer spending, business investment, housing and exports have dropped more than in any time since WWII. Unemployment has soared.

We naturally focus on the downturn’s impact on the manufacturing sector, which has lost nearly two million jobs since the recession began in December 2007. Industrial production has plummeted 16.4 percent during the same period.

Still, the NAM’s 2009 Report is a forward-looking document, one that identifies many reasons why Americans can expect the economy to grow in 2010 and beyond. Whether it’s improvements in the housing market, rising activity in European countries, or new orders for capital goods, indications are that a recovery may be in the early stages.

Most strikingly, the analysis by the NAM’s chief economist, David Huether, finds that over 40 percent of the manufacturing jobs lost during the recession may be regained. There is legitimate concern about the possibility of a “jobless recovery,” but the projections estimate a return of 913,000 manufacturing jobs by 2014 – bringing total manufacturing employment back up to 12.7 million.

So there are grounds for optimism, but even greater grounds for caution – caution by officials at the local, state and especially the federal level. A recovery could stall out or even shift into reverse if Congress and the Administration enact policies that discourage investment, hamper flexibility, or raise the costs of doing business in the United States. Prospects for good jobs, a strong manufacturing sector and a growing economy depend on U.S. global competitiveness. (continue reading…)