Manufacturing Will Fare Better In Second Half

After a weak first half of 2007, Manufacturers Alliance/MAPI says indicators point to increased production in the second half.

ARLINGTON, Va. – The second half of 2007 will be better for U.S. manufacturing, according to a study by the Manufacturers Alliance/MAPI.
For June, the composite index was 65, up from March’s 58, and its highest since June 2006. A reading above 50 indicates overall manufacturing activity is expected to increase in the next three to six months.
Seven out of the 10 factors covered by the quarterly survey were higher than the previous report. Of the remaining factors, two decreased, and one remained flat.
The export orders index, measuring second quarter 2007 orders compared to second quarter 2006, increased to 79 percent, an all-time high. The research and development index also rose to 79 percent, its all-time high.
The orders index rose 15 points to 75 percent. The backlogs index increased to 71 percent from 60 percent in March, indicating new orders are exceeding shipments.
The profit margin index increased to 69 percent from 62 percent, and the prospective shipments index increased to 77 percent from 73 percent, marking the second quarterly increase.
The investment index edged up to 72 percent from 71 percent. The annual orders index was steady at 80 percent.
The inventory index slipped to 70 percent from 77 percent, signaling the run-up in inventories is easing. Capacity utilization dropped from 46.7 percent to 37.6 percent, most likely due to the slow pace of manufacturing in the first half of the 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, Ph.D., Manufacturers Alliance/MAPI Economist and survey coordinator. “This quarter’s survey results paint a consistent picture of increased production in the latter half of 2007.”