The Manufacturers Alliance for Productivity and Innovation (MAPI) Survey for December 2011 fell slightly, to 66 from 67 in the September report, yet manufacturing's staying power seems evident in the face of an uncertain economy.
This is the ninth consecutive quarter the index has been above the threshold of 50, the dividing line that separates contraction and expansion. Despite the sixth straight decrease from the record high of 81 in June 2010, the index remains consistently high, averaging 70.8 during that period.
"Despite the challenges posed by slower economic growth and continued problems in the construction and financial sectors, the manufacturing sector is the 'Energizer Bunny' of the U.S. economy," said Donald A. Norman, Ph.D., MAPI economist. "Barring a meltdown in the Eurozone, the U.S. manufacturing sector should continue growing at a moderate pace heading into 2012."
The quarterly orders index, based on a comparison of expected orders in the fourth quarter of 2011 with those in the same quarter one year ago, fell to 70 in December from 79 in the September survey.
The export orders index was 71 in the current survey, moving down from 80 in September.
The backlog orders index fell to 67 from 73 in the previous report; declining backlogs signal slowing activity.
The profit margin index slipped to 70 in December from 74 in September.
Based on a comparison of inventory levels in the fourth quarter of 2011 with those in the fourth quarter of 2010, the inventory index decreased to 73 in December from 74 in September. Norman, however, views this as a relatively positive sign since it suggests that the steady inventory build observed over the past year is slowing.
The capacity utilization index, based on the percentage of firms operating above 85%of capacity, also showed some softening. It retrenched to 38.1% in December from 43.3% in September. Still, the index is well above the long-term average utilization rate of 32%.
The report found some improvement in the forward looking indexes wit the annual annual orders index moving to 86 in December from 84 in September. The U.S. prospective shipments index, advanced to 83 in December from 81. The R&D index was 77 in the December report compared to 76 in September.