For the more relevant manufacturing segment of the overallindustrial sector, the picture was generally negative. "For thefirst quarter as a whole, manufacturing output was down 0.5%, andthis follows a decline of 0.6% in the fourth quarter of 2007," theeconomist points out. Though the manufacturing situation in Marchwas improved over January and February, it was hardly worthbragging about. According to the latest Manufacturing ISM Report onBusiness from the Institute for Supply Management in Tempe, AZ,even as the overall US economy grew for the 77th consecutive month,economic activity in the manufacturing sector remained stagnant inthe final month of Q1.

|

"The manufacturing sector failed to grow in March as the PMI(Production Manufacturing Index) fell below 50% for the secondconsecutive month," says Norbert Ore, chair of the institute'sManufacturing Business Survey Committee. "This completes theweakest quarterly performance for the US economy since Q2 of 2003.Manufacturers' order backlogs continue to erode as the New OrdersIndex failed to grow for the fourth consecutive month.Additionally, manufacturers continue to experience heavy costpressures, as the prices they pay are still rising even with sloweroverall demand."

|

Additional slowdowns can be expected. A new report fromIndustrial Info Resources Inc. in Sugar Land, TX says that whilespending within the nation's industrial manufacturing industry overthe last nine months closely matched that for the preceding ninemonths, each of the past three quarters has seen a decline.According to IIR statistics, capital and maintenance projectcompletion descended from $8.6 billion in Q3 '07 to $7.8 billion inQ4 and $7 billion in Q1 '08. A bigger percentage drop is predictedfor Q2.

|

At the same time, both Ore and Bethune note, while the overallsector suffers, some manufacturers are benefiting from strongexport demand. "Industries such as aerospace, computers andagricultural equipment, which have a high exposure to exportmarkets, are performing much better than industries that haveprimarily a domestic orientation, such as wood products,construction machinery and motor vehicles," the latter remarks. Ona yearly basis, he says, computers and electronics are up 17.9% andaerospace is up 7.2%. By contrast, wood products are down 11.5%,motor vehicles 9.1% and machinery 1.2%.

|

Unfortunately, the problems in the US economy appear to beaffecting the rest of the world as well. The Global ManufacturingPMI from JPMorgan reveals that growth of global manufacturingproduction in March was the weakest since May '03, as the volume ofnew orders was unchanged compared to levels a month earlier. Thereport says cost inflationary pressures remain elevated, with therate of increase in average purchase prices acceleratingsharply.

|

"Global manufacturers faced the dual headwinds of muted demandand accelerated cost inflationary pressure in March, with the rateof increase in input prices the second strongest in the surveyhistory," says David Hensley, JPMorgan's London, UK-based directorof global economics coordination. "The current data also suggestthat growth of global industrial product slowed to a rate of around1% towards the end of Q1 and provided no real evidence that thistrend is likely to be reversed in the coming months."

|

Regionally, PMIs for China and India remained solidly above the50 no-change mark, while the Eurozone PMI lost further ground,posting a five-month low of 52 as robust gains in Germany werepartly offset by weakness in Ireland, Spain and Italy. Japan's PMIfell back below the 50 mark for the first time since October.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.