Manufacturing Survey Shows Slower Growth

 

The three most significant factors that might discourage capacity investments, the poll reported, are federal tax policy, U.S. wage levels and government regulations.

American manufacturing sector is still growing, but at a slower rate than over the past 12 months, according to an industry study. Index remains above 50 percent mark for seventh consecutive month.

The most recent quarterly Manufacturers Alliance/MAPI business outlook survey shows that its June 2011 composite index fell to 68 percent from 72 percent in the first quarter of the year. This is the seventh consecutive quarter the index has been above the 50 percent threshold, the dividing line that separates contraction and expansion.

The benchmark tracks orders, exports, prospective shipments and various other measures. It has declined every quarter from the record high of 81 percent one year ago.

Donald Norman, the MAPI economist who led the study, said overall manufacturing activity remains fairly robust even if the rate of expansion is slowing. “Although a number of individual indexes declined, they remain at relatively high levels,” Norman said.

Of the 12 indexes the group measures, six showed improvement while six declined. The research and development index, which reflects research and development spending, rose to a record high of 83 percent from 75 percent in the March survey.

The export orders index, which compares exports in the second quarter of 2011 with the same quarter in 2010, rose to a record high of 87 percent from 80 percent in March. The non-U.S. prospective shipments index, which measures expectations for shipments abroad by foreign affiliates of U.S. firms, increased to a record 89 percent from 84 percent.

The capacity utilization index, which measures the percentage of firms operating above 85 percent of capacity, edged up to 32.3 percent from 30.7 percent in March. The index has hovered around the long-term average utilization rate of 32 percent since January.

– Courtesy of Georgia Wells, MarketWatch