APICS Index: Manufacturing Rebound, 'Soft Landing' For Economy

By BridgeNews U.S manufacturing activity rebounded in August, with the APICS business outlook index rising to 51.5 from July's 46.4. Components measuring current and future conditions both rose, prompting the index's creator -- IndustryWeek columnist Mike Evans -- to say that unless the Federal Reserve raised interest rates further, "another soft landing (for the economy) has been successfully accomplished." Further reason for optimism in the health of the industrial sector was that the current component topped the future index for the first time in four months. The future component improved to 53.4 from 44.7, while the current gauge rose to 49.6 from 48.1. Typically, an inversion of the future to the current measure has signaled slower growth. "The most recent inversion, which started in May, lasted only three months, indicating that the slowdown in the manufacturing sector would be quite brief," says Evans, who created the index, which polls 100 manufacturing firms on their economic environment. Evans noted that since the inception of the index in September 1993, there have been three inversions, including the latest episode. The first started in August 1994 and lasted 10 months while the second began in July 1997 and ran seven months. In the latest survey, shipments, unfilled orders and inventories all increased while employment and productivity fell. As for the future component, new orders, production planning and the inventory/sales ratio all advanced. APICS is The Educational Society for Resource Management.

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