The Economy

Manufacturers Alliance Business Outlook Index Hits Five-Year High

Dec. 21, 2004

Measure indicates U.S. production will increase during the next three months.

Although the manufacturing sector of the U.S. economy continues to shed jobs -- some 65,000 during December 2002 -- it appears that production is on the rise and will continue to be between now and the end of March. The quarterly business outlook index compiled by the Manufacturers Alliance/MAPI rose to 67% in December 2002, its highest mark since December 1997. In September 2002 the index was 59%. A figure of 50% or better on the composite business index indicates that overall manufacturing activity is expected to increase during the next three months. "The latest survey represents fairly significant optimism, at least in the near term, for manufacturers in 2003," says the Arlington, Va.-based business policy group. Its 450 member companies include leading producers in heavy industry, autos, electronics, precision instruments, telecommunications, computers, chemicals, oil and gas, and aerospace. However, "while the index clearly points to growth in manufacturing in 2003, it does not provide a measure or forecast of the rate of growth," cautions Donald A. Norman, an economist at Manufacturers Alliance/MAPI. Indeed, "given the continuing inventory correction, much of [the] expected increase in activity may be aimed at rebuilding inventories," Norman says. Nevertheless, several of the signs are encouraging. For example, two of the four components of the overall manufacturing activity index -- profit margins and shipments -- rose significantly between the months of September and December 2002. The profit margins index jumped to 63% in December from 45% in September, the first time in two years that it had crossed the 50% dividing line between falling and rising margins. The shipments index, measuring expectations for the first quarter of 2003, increased to 71% in December from 62% in September. Meanwhile, the index of capital spending, another business activity measure but not part of the composite index, rose to 57% in December from 45% in September. "The jump in the profit margin and capital spending indexes is particularly noteworthy given that these indexes have remained stubbornly low throughout the past two years," says Norman. "The real question now concerns just how strong of a recovery we can expect to see in 2003." The index data were derived from a late-2002 survey of 57 senior financial executives in Manufacturers Alliance/MAPI member firms.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.