MAPI: Manufacturing May Be Headed For Recovery

ARLINGTON, Va. -- Although it faces a long, slow road to recovery, there is some evidence that the worst has passed for the manufacturing sector, according to the Manufacturers Alliance/MAPI.

MAPI's June 2009 composite index rose to 24 from an historic low of 21 reported in the March 2009 report. At 24 percent, the index indicates that overall manufacturing activity is expected to contract over the next three to six months. It's the second lowest level since 1972, but it marks the first time it has shown improvement since June 2007.

“The small rise in the composite index and the improvement in a few of the individual indexes indicate that the manufacturing sector is no longer in a freefall,” said Donald A. Norman, Ph.D., MAPI Economist. “Even as the forward looking indexes point to lower activity over the next three to six months.” 

Seven of the 12 individual indexes measured by MAPI fell to all-time lows, but only slightly and none by more than five points. Declines were offset somewhat by improvement in other areas.

The inventory index dropped to 15 percent in June from 37 percent in March, indicating that manufacturers are making progress in paring an inventory overhang.

The non-U.S. prospective shipments index rose to 15 percent from 8 percent, and the export orders index rose to 11 percent from 8 percent.

The quarterly orders index inched upward to 6 percent from 4 percent. The U.S. investment index held steady at 14 percent.

The backlogs index, research and development index, capacity utilization index, non-U.S. investment index, profit margin index, annual orders inex, and U.S. prospective shipments index all dropped to record lows.

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