U.S. Manufacturing Should See Improvements For Rest Of 2007

Export orders and research and development will reach record levels according to Manufacturers Alliance/MAPI.

According to the Manufacturers Alliance/MAPI Survey on the Business Outlook, its June 2007 composite index of 65 is up from 58 reported in March. This means that U.S. manufacturing will see a better second half this year.

"The manufacturing sector is reawakening after experiencing a slowdown from the solid growth of production from 2004 through most of 2006," said Donald A. Norman, Manufacturers Alliance/MAPI economist. "This quarter's survey results paint a consistent picture of increased production in the latter half of 2007."

A composite business index above 50 indicates that overall manufacturing activity is expected to increase over the next three months to six months.

A majority of the factors measured by the quarterly survey were higher than the previous report, predicting improvement in the industrial sector and providing a fairly robust measure of optimism. The exports orders index rose to 79% from 75% in March. It surpassesd the previous high of 78 set in March 2006.

Highlights of the report include:

  • The R&D index rose to 79 from 75 in March, confirming the underlying strength in manufacturing, according the report.
  • The quarterly orders index hit 75% in June 2007, up from 60% in the March 2007 survey.
  • The profit margin index rose to 69% from 62%.
  • The inventory index declined to 70% in June 2007 from 77% in March 2007.
  • Capacity utilization, based on the percentage of firms operating above 85% of capacity, fell to 37.6% in June 2007 from 46.7% in March 2007. However this figure remains above its long-term average of 32.5%.
  • The backlogs index also saw a large increase, to 71%, as compared to March reading of 60.
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